LONDON: Brent crude fell below $99 per barrel on Wednesday, weighed by the prospect of sluggish fuel demand in top consumers the United States and China and rising stockpiles of US crude.
More bleak economic news came courtesy of the International Monetary Fund (IMF), which trimmed projections for this year and next - implying limited upside for oil demand growth.
The North Sea benchmark has lost nearly 6 percent over the past five sessions in a wider commodities rout triggered by data showing growth in China, the world's second largest oil burner, had slowed unexpectedly in the first three months of 2013.
Gold later edged back, although other metals such as copper continued to decline.
"At the moment the oil complex is in a technical downtrend with the fundamentals being driven by a deteriorating demand projection in a robust supply environment," said Dominick Chirichella of Energy Management Institute.
The head of the International Energy Agency, Maria van der Hoeven, said the oil price decline was proof that the market was adequately supplied.
Brent crude shed $1 to $98.91 by 1200 GMT, after sinking earlier to $98.80, the weakest since July 2012. US crude slipped $1.29 to $88.43.
"For now there is no immediate reason - other than short covering - to suggest that oil prices are ready for strong move to the upside," said Chirichella.
While further weakness in Brent crude cannot be ruled out, oil prices are unlikely to fall below the $100 a barrel mark past the second quarter, Barclays said in a note on Tuesday.
A pick-up in hedging activity from consumers who have been waiting on the sidelines for better entry points for their hedging programmes could help support prices, it added.
"The second layer of support is likely to come through market expectations surrounding comfort levels for OPEC producers to continue producing above their target, below the $100/bbl, which they have lately mentioned as appropriate for both consumers and producers," according to Barclays.
Data from the American Petroleum Institute (API) showed total weekly US crude stocks dropped by 6.7 million barrels, in contrast to a Reuters survey in which analysts forecast a rise of 1.3 million.
More closely watched data from the US government agency, the Energy Information Administration, will be released Wednesday at 10:30 a.m. EDT (1430 GMT).
Comments
Comments are closed for this article.