Oil Futures Fall; Morgan Stanley Sees Supply Recovery - report
Oil dropped for a third day in London amid speculation that talks between Sudan and South Sudan may lead to the resumption of crude exports, Bloomberg said.
Brent futures declined as much as 0.5%, while the U.S. benchmark West Texas Intermediate slipped 0.7%. Sudanese President Umar al-Bashir and South Sudan's Salva Kiir will meet in the Ethiopian capital Addis Ababa on Jan. 13, having agreed last week to set up a demilitarized zone along their border "without further delay." Morgan Stanley said that Brent will come under pressure as demand eases after winter in the Northern Hemisphere and supplies in Angola, Nigeria and South Sudan are restored.
"The improved supply-demand balance should put marginal downward pressure on Brent prices over the next few months," Hussein Allidina, head of commodities research at Morgan Stanley in New York, said in a report. "We assume production will return from South Sudan through 2013."
Brent for February settlement slipped 43 cents to US$110.88 a barrel on the London-based ICE Futures Europe exchange at 1.34 p.m. local time. The European benchmark was at a premium of $18.23 to WTI, in line with the closing level on Jan. 4, the narrowest in more than three months.
Crude for February delivery declined as much as 64 cents to $92.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract advanced to $93.09 on Jan. 4, the highest settlement since Jan. 2.
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