Brent crude oil steadies near $66 before long weekend

LONDON (Reuters) - Oil prices steadied on Friday as worries over the impact on crude supplies of war in the Middle East were balanced by reports of profit-taking ahead of a long weekend.

Monday, May 25 is Memorial Day in the United States and a public holiday in much of Europe, closing many markets.

"No one wants to hold open positions ahead of a long weekend so books are being squared, bringing some consolidation," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.

July Brent crude was down 25 cents at $66.29 a barrel by 0800 GMT after closing up 2.3 percent on Thursday.

U.S. crude futures are experiencing their longest winning streak since records began in 1983, helped by a drop in U.S. crude and product stockpiles last week, reflecting better demand in the world's largest oil consumer. [EIA/S]

U.S. crude for July was down 27 cents at $60.45 a barrel, but poised to post gains for the 10th week in a row.

Data from the U.S. Energy Information Administration this week showed a big decline in U.S. oil product stockpiles, suggesting end-user demand has been strong.

"With U.S. travel expected to reach a 10-year high over Memorial Day, according to AAA (American Automobile Association), product inventory is expected to decline even further over coming weeks," ANZ analysts said in a report.

Fighting in Iraq has increased geopolitical tension in the Middle East with concern that conflicts in the region could disrupt supply.

Islamic State fighters tightened their grip on the historic Syrian city of Palmyra on Thursday and overran Iraqi government defences east of Ramadi, the provincial capital that they seized five days earlier.
Government forces have been routed across large parts of central Iraq, the second largest oil exporter in the Organization of the Petroleum Exporting Countries.

"The headlines from the Middle East have been worrying, although the fighting probably won’t affect oil supply," said Fritsch at Commerzbank.

U.S crude was also supported by expectations of lower shale oil production, said Ric Spooner, chief analyst at CMC Markets.

"If we were to see prices $5 to $10 higher, that would attract new production, so the upside is capped," he said, adding that this encourages traders to sell when prices rallied.

U.S. crude stocks in delivery hub Cushing, Oklahoma, fell by almost 740,000 barrels between Friday and Tuesday, trade sources said, citing a report by market intelligence firm Genscape.

(Additional reporting by Florence Tan in Singapore; Editing by Susan Thomas)

Reuters By Christopher Johnson

Source:https://uk.finance.yahoo.com/news/oil-edges-down-wti-set-051814890.html