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Oil steady around $108 in range bound market

While there has been no major disruption to oil supplies due to tensions in the Middle East, Africa and Europe, fears that exports could be dented continued to underpin crude prices.

Traders said North Sea and West African physical crude markets are oversupplied, with sellers discounting heavily in an effort to attract buyers such as oil refiners.

Brent crude, which has been trading between $106-$109 over the past two weeks, slipped 5 cents to $107.62 a barrel by 0815 GMT on Wednesday. U.S. crude rose 49 cents to $101.46 a barrel.

The European Union and the United States imposed further sanctions against Russia on Tuesday, targeting its energy banking and defence sectors in the strongest international action yet over Moscow’s support for rebels in Ukraine.

Hans van Cleef, senior energy economist at ABN Amro in Amsterdam, said the sanctions were unlikely to have an immediate impact on oil prices.

“The sanctions are more against investment in technology, and the impact on the oil markets will mainly be long term,” he said.

The spread between the two benchmarks settled at $6.75 on Tuesday, its widest since July 3.

Continued fighting in Libya, Iraq and Israel supported oil prices.

In Libya, crude oil output was around 500,000 barrels per day and all the country’s oilfields were secure despite intense fighting in the eastern city of Benghazi, where many oil ports are based.

“Libya increased output ... but on the other hand tensions in Libya remain very high,” van Cleef said.

U.S. crude fell on Tuesday after a fire broke out at a unit that upgrades gasoline at CVR Refining’s 115,000 barrel-per-day refinery in Coffeyville, Kansas, a major consumer of West Texas Intermediate crude.

Data from industry group the American Petroleum Institute (API) showed that crude inventories fell by 4.4 million barrels to 369.4 million in the week to July 25, versus analysts’ expectations for a drop of 1.5 million barrels.