European refiners face dwindling fortunes

Squeezed between shrinking exports to the United States, game-changing giant Middle East refineries and dwindling domestic demand, more European refineries are likely to face the axe.

Demand for refined product in Europe is set to decline by 170,000 bpd every year over the coming five years, leading to the closure of two small refineries or one large refinery.

Oil major Shell announced that it was considering the sale of the bulk of its downstream business in Italy, following the recent sale of refineries in Britain and Germany. Overall European refining margins, or cracks, averaged at $5.46 a barrel in March, compared with $22.83 a barrel in the United States, where refiners enjoy significantly lower crude prices.

Brent eases to near $107 as US, Italy rattle investors

Brent crude edged down towards $107 a barrel as a stalemate over fiscal talks in the United States and political uncertainty in Italy rattled investors, even as geopolitical tensions in the Middle East supported prices.

Investors shied away from riskier assets as U.S. politicians squabbled over ways to reduce debt, while Italian Prime Minister Mario Monti's decision to resign early raised fears that the country could stray from economic reforms needed to steer itself out of the financial crisis.

Tensions in the Middle East that threaten to disrupt oil supply have supported prices throughout the year. The region is facing fresh unrest in Egypt, fighting in Syria and global pressure on Iran to stop its nuclear programme.

Brent crude edged down 3 cents to $107.30 a barrel. U.S. crude was at $85.63, up 7 cents.

OPEC members collectively are producing about 1 million barrels a day of crude more than needed, swelling oil stocks at a time of weak demand, Iranian OPEC governor Mohammad Ali Khatibi said.

Libya Oil Halt may cause price surge

The U.S. Energy Information Administration has said that a halt in Libya’s oil output would cause prices to soar because OPEC’s spare production capacity is limited to about 2 million barrels a day.

Unexpected outages in countries including Sudan, Syria, Yemen and Brazil have reduced output from oil producers outside of the Organization of Petroleum Exporting Countries. A stoppage of production in Libya “would probably create a spike in oil prices.

Violence in the Middle East, including a Sept. 11 attack in Libya that killed the U.S. ambassador and three colleagues contributed to oil price gains. The attacks on U.S. and other diplomatic missions in Libya, Egypt, Tunisia, Sudan and Yemen over the past few days were largely sparked by a film denigrating Islam’s prophet.

Crude for October delivery fell $2.38, or 2.4 percent, to settle at $96.62 a barrel on the New York Mercantile Exchange. The price fell to $94.65 at 2:09 p.m. from $97.32 at 2:03 p.m. on a surge in volume. The daily decline was the largest since July 23.

Brent oil dips below $114 as supply fears ease

Brent crude oil futures dipped below $114 per barrel as supply disruption concerns faded slightly. Worries about disruption to supply, while still a significant factor, eased after the United States said it did not believe Israel had made a decision to attack Iran.

U.S. Defense Secretary Leon Panetta, who visited Israel two weeks ago, told reporters it was important that military action should be the last resort. His remarks helped ease worries of a conflict after Israeli Prime Minister Benjamin Netanyahu said that most threats to Israel's security were dwarfed by the prospect that Iran could obtain nuclear weaponry.

Brent crude was down 33 cents at $113.70 per barrel after ending up 43 cents at its highest settlement since May 3. U.S. crude fell 42 cents to $93.01 after closing 70 cents higher. Brent has swung between a high of more than $128 per barrel and a low of $88.49 this year as investors' focus has shifted between heightened Middle East supply worries and a weakening growth outlook. The range of nearly $40 is the widest since 2009, when it was $40.91. In 2011 the range was $34.65 and in 2010 $27.33.