LONDON: Brent crude oil fell towards $101 a barrel on Thursday, just above a 14-month low, on plentiful fuel supplies and Chinese economic data pointing to slowing demand.
The world's top two crude oil benchmarks have fallen by more than $10 a barrel since June on a build-up of supply in the Atlantic Basin and diminishing worries over the risk that conflicts in the Middle East would hit oil production.
Global economic growth also appears to be faltering, fuelling concerns a market surplus could last for some time.
Libya has resumed exports from its largest port, helping push the country's oil output to its highest for months, while top exporter Saudi Arabia raised its output in July to 10 million barrels per day.
Brent crude for October was down 90 cents at $101.38 a barrel by 0920 GMT. It touched $101.07 on Tuesday, its lowest since June 26, 2013.
U.S. crude slipped to its lowest since January at $92.50 a barrel, down 95 cents, before recovering to trade around $92.75.
"There is no shortage of oil," said Andrey Kryuchenkov, oil strategist at Russian bank VTB Capital in London.
Investors were more concerned about weak demand at a time when the supply outlook remains generally comfortable, despite world political worries, he said.
"Fighting in Iraq has had only a very limited impact on producing and transporting facilities. At the same time, lagging European demand and the seasonal lull in Asia continue to weigh on sentiment," Kryuchenkov said.
A survey of China's factory activity showed that growth in the sector slowed to a three-month low in August, adding to concerns about economic softness that could depress oil use in the world's second-largest oil consumer.
"This is a figure which indicates that growth is likely to be reasonably moderate and any upside to current expectations about China will be possibly muted," said Ric Spooner, chief analyst at CMC Markets.
"It will be generally a negative for commodities."
The drop in Brent towards $100 has sparked talk that OPEC could consider cutting output, although delegates from the producer group have said higher seasonal demand in coming weeks was expected to support the market.
Prices would have to be lower over a sustained period before OPEC would cut output, Spooner said.
"Oil is doing what it should be doing based purely on fundamentals," said Abhishek Deshpande, lead oil analyst at French bank Natixis in London.
"I would not be surprised to see Brent touching $100 a barrel, or even slightly lower, for a brief period of time as market fundamentals are so weak right now."
In the United States, a larger-than-expected drop in crude inventories last week buoyed West Texas Intermediate and helped the September contract gain $1.59 a barrel on its last day of trade.
Societe Generale analysts said in a note that the weekly statistics were moderately bearish for products and could drive U.S. refineries to start maintenance early.
Comments
Comments are closed for this article.