Oil hovered near a two-month high yesterday on the back of an improving growth outlook in the United States, the world’s biggest consumer of the fuel, and a concern that an outbreak of violence in South Sudan may affect supplies.

“The main underlying reason that oil is at a two-month high is that we’ve seen positive economic indicators from the US and demand for oil has been improving,” said Richard Mallinson, a London-based geopolitical analyst at Energy Aspects.

“But the situation in South Sudan is causing mild concern and that’s also pushing oil prices higher. South Sudan produces 250,000 barrels per day and the rebel group has taken over Unity state, the main oil producing region.”

The IMF’s director Christine Lagarde said that her organisation, which offers global economic advice and loans to countries in need, would raise its outlook for US growth due to better economic indicators such as falling unemployment numbers.

Meanwhile, in South Sudan, the United Nations has begun evacuating “non-critical staff” from the capital Juba after clashes erupted last week following a coup attempt. Fighting broke out between supporters of the president Salva Kiir and the former vice-president Riek Machar with casualty figures reported to be in the hundreds.

West Texas Intermediate, a North American crude oil benchmark, for February delivery was little changed, dropping 41 cents to US$98.91 a barrel during electronic trading on the New York Mercantile Exchange, according to Bloomberg News.

The contract rose 28 cents to $99.32 on December 20, the highest close since October 18.

Brent for February settlement fell 28 cents to $111.49 a barrel on the London-based ICE Futures Europe exchange. Brent is the European benchmark for crude oil.

Mr Mallinson believes oil prices will be supported next year by economic improvement in developing nations and some parts of Asia as well as the continuing disruption of oil production in Libya. An increase however of supply from producers such as Iraq may mean a more challenging year for Opec, he said.

Libyan oil exports tumbled this year as political discord and labour strikes closed oilfields, refineries and ports. The shutdown has cut Libyan output to 250,000 barrels a day from 1.4 million barrels a day in March and the government has said it may forcibly reopen ports.

mkassem@thenational.ae