LONDON: Brent crude fell to $86 a barrel on Friday after a confirmed case of Ebola in New York raised fears of travel restrictions that could trim jet fuel demand, and poor economic growth expectations weighed on projected oil consumption.
European equities and US stock futures fell sharply on news that a doctor in New York City had been diagnosed with Ebola.
The doctor, who had worked in West African countries afflicted by the deadly virus, was diagnosed after returning to New York. "Such news is not good for risk assets, with investors looking for a flight to safety. This could curb travel and that's how it could feed through to the oil markets," said Ben Le Brun, market analyst at OptionsXpress.
Brent crude for December fell $1.02 a barrel to a low of $85.81 before recovering slightly to around $86 by 1005 GMT. US December crude fell 85 cents to $81.24 a barrel.
Economists anticipate subdued growth in China and the euro zone next year, though signals from India are more positive, according to a Reuters poll released on Friday.
The gloomy outlook in two major oil consuming markets added to fears of slowing oil demand at a time of global oversupply.
Manufacturers in China and the euro zone performed better than expected, according to purchasing managers' surveys released on Thursday, but industrial growth in the United States fell to its slowest rate since July.
Brent was on track to end the week flat, after four straight weeks of steep losses.
The global benchmark rose $2.12 on Thursday on news that Saudi Arabia supplied less to the market in September.
But many analysts thought that the market had overreacted to the news, given that overall Saudi production rose month-on-month, with unsupplied oil being placed in storage.
"The reaction to the Saudi news was surprisingly high, and we may see a correction today," said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.
Saudi Arabia, the world's top exporter, has previously sent signals it is comfortable with markedly lower oil prices and willing to maintain high supply levels to compete for market share.
The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is a leading member, will meet on Nov. 27 to review its output target for the first half of 2015. So far, only a minority of members have called for an output cut.
Commerzbank cut its average Brent price forecast for 2015 to $85, down from $105, on signals that OPEC will defend market share rather than cut production to shore up prices.
"It is unlikely that OPEC will cut production sufficiently to remove the expected oversupply from the market next year," said analyst Carsten Fritsch in a note.
Standard Chartered and Citi both cut their Brent price forecasts on Tuesday.
Exporters in the Middle East and North Africa have maintained strong supply despite political instability. Libya's exports have grown even as the country has fragmented under two competing governments.
Comments
Comments are closed for this article.