LONDON: Brent crude oil fell below $113 a barrel on Tuesday in a fifth day of losses as economic slowdown on both sides of the Atlantic deepened fears of lower oil demand at time of ample supply from major oil producers.
Saudi Arabian Oil Minister Ali al-Naimi said on Tuesday the Kingdom was pumping around 10 million barrels per day (bpd), close to its highest for decades, and was storing 80 million barrels in case of any disruption in supplies.
Members of the Organization of the Petroleum Exporting Countries are concerned very high oil prices earlier this year could hit consumption and dent world economic activity.
But global growth prospects have weakened in recent weeks.
Political changes in the euro zone after France elected a new leader and Greece's inability to form a new government have shaken an already fragile outlook for the debt-laden region, while disappointing US jobs data stoked concerns about growth in the world's largest economy.
Brent crude fell 50 cents to $112.66 a barrel by 0755 GMT, down more than 5.5 percent so far in May after five days of falls. US crude also fell for a fifth day, losing $1.14 per barrel to touch a low of $96.80 before recovering slightly.
Eugen Weinberg, global head of commodities research at Commerzbank in Frankfurt said oil was being squeezed from both the supply and demand sides of the market.
"Renewed concerns over the health of the euro zone coincide with weaker growth elsewhere and news of better oil supply," Weinberg said. "Saudi Arabia is pumping plenty of oil and even storing it, so there is no shortage."
"Risk aversion is also rising and the dollar is up, so all the pressures are negative for oil at the moment," he said.
US INVENTORIES
The dollar rose around 0.2 percent against a basket of other currencies, while the euro faced more pressure.
Crude oil stocks in the United States, already at their highest since 1990, are forecast to rise for a seventh straight week, as supply in Cushing, Oklahoma builds ahead of a key pipeline reversal, a preliminary Reuters poll showed ahead of weekly inventory data.
Data from the US Energy Information Administration released last Wednesday showed crude stocks reached the highest for two decades during the week to April 27. Cushing crude stocks were at a record of 42.96 million barrels during the period.
The weekly inventory report from industry group American Petroleum Institute is due late on Tuesday.
Resumption of talks between Iran and the West over Tehran's nuclear programme have helped ease geopolitical tensions and reduced the risk premium built into oil prices, analysts say.
The "Iran premium" was at one point estimated to be as much at $20 per barrel, but has eased gradually as talks have continued between the major world powers.
Traders said news Iran was accepting yuan for some of the crude it supplies to China indicated supply from the OPEC member would continue.
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