REUTERS

LONDON BRENT crude oil slipped below $120 per barrel on Thursday, depressed by news of higher OPEC production and lower estimates of global oil demand.

But the oil market is looking increasingly well supplied as Middle East output rises and fuel demand across the industrialised and developing economies is weaker than expected.

The International Energy Agency, which advises 28 industrialised nations on energy policy, said in its monthly report the oil market could be turning the corner after more than two years of tightening as global oil inventories rose.

“The cycle of repeatedly tightening fundamentals since 2009 has been broken for now,” the IEA report said.

ICE Brent futures fell 53 cents to $119.65 a barrel by 1240 GMT, after touching a low of $119.51 earlier in the session.

US oil was up 2 cents at $102.72. The dollar weakened against a basket of currencies.

“I think again the IEA report illustrates that there is plenty of oil in the market at the moment.

There is no shortage There is too much - a physical oversupply,” said Carsten Fritsch, oil analyst at Commerzbank.

Oil industry analysts and traders said prices were being underpinned by fears of supply disruptions if tensions between Iran and the West erupted into confrontation. Hopes of strong global economic growth were also supportive.

“Economic growth in China and geopolitical risks over Iran and Syria are helping to keep up prices,” said Christopher Bellew, senior oil broker at Jefferies Bache in London.

Oil investors are awaiting talks between Iran and major world powers after Tehran said it would present new proposals which might help resolve the dispute over its nuclear plans. The United States and its allies say Iran wants to make an atomic bomb, something the Islamic Republic denies.

The offer for new proposals was made by head of Iran’s Supreme National Security Council, Saeed Jalili, according to the country’s Englishlanguage Press TV. It was unclear if Tehran was willing to address its disputed uranium enrichment drive as six world powers want.

“The Iran meeting is going to be very important input for the second half of the year,” said Oliver Jakob at consultancy Petromatrix. “Speculators are on the long side and will be repositioning tomorrow.”