LONDON: Oil traded slightly lower below $99 a barrel on Thursday, pressured by ample supply and concern over the weakening of demand growth in major consumer nations, as well as a rise in the U.S. dollar.
Threats to supply as Libya's output fell and talk of OPEC production cuts limited the decline for global benchmark Brent, which hit a 26-month low on Monday after data showing a slowdown in China's factory output raised demand concerns.
"At present, it is mainly news of (possible) lower OPEC production that is lending prices buoyancy," said Eugen Weinberg, analyst at Commerzbank in Frankfurt.
Brent was down 7 cents at $98.90 by 1024 GMT. Prices have declined around 15 percent from a nine-month peak of $115.71 reached in June. U.S. crude fell 21 cents to $94.21 a barrel.
A setback in Libya's output - which has fallen by about 200,000 barrels per day - has put threats to supply higher on investors' list of concerns.
In addition, Nigerian oil unions have launched a strike they say could affect exports, although so far it has not, and the secretary-general of the Organization of the Petroleum Exporting Countries raised the possibility of a supply cut in 2015.
Nonetheless, the latest sign of ample supplies pushed prices lower on Wednesday. U.S. crude inventories rose 3.7 million barrels last week, the government's weekly supply report showed, in contrast to the decline analysts had forecast.
The U.S. dollar hit its highest in more than four years against a basket of currencies on concern of a faster hike in interest rates.
A stronger dollar makes dollar-priced commodities such as oil more expensive for buyers using other currencies and tends to weigh on oil prices.
"The dollar is getting stronger and the overall market is weak with high inventories," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
Scotland, home to most of Britain's North Sea oil reserves, is holding its referendum on independence on Thursday and Commerzbank said the decision could affect oil prices.
"In any case, a 'yes' vote for Scottish independence would generally increase uncertainty on the markets in the short term, which would certainly be sufficient to put pressure on oil prices," Commerzbank said.
Comments
Comments are closed for this article.