LONDON: Brent oil steadied above $97 a barrel on Tuesday, supported by U.S. and Chinese economic data, but was still set for its deepest quarterly drop in more than two years because of strong supply and a surging dollar.
Brent crude has slumped since June, when it hit this year's high of $115.71. Strong supply, a strong dollar and lacklustre economic data drove prices to a 26-month trough last week.
Brent for November delivery was up 32 cents at $97.52 per barrel by 0958 GMT. It has lost more than 13 percent in the third quarter, its biggest quarterly drop since April-June 2012.
U.S. crude was up 19 cents at $94.76 a barrel but was also on track for its biggest quarterly fall since the second quarter of 2012.
"What we're seeing is a bit of profit-taking as traders close out their positions at the end of the month," said Michael Hewson, chief market analyst at CMC Markets in London.
"But the longer term trend is towards a falling price because China is slowing down and growth in Europe remains weak," he added.
Many analysts say the downward trend is set to last due to weak economic growth and ample supply. Brent has fallen 5.6 percent this month and U.S. crude around 1.4 percent.
"I still believe we're in a downward trend: the market is pretty well supplied," said Tony Machacek, an energy broker at Jefferies Bache. "Brent could potentially head towards $75."
Upbeat U.S. consumer spending data on Monday for August, however, provided signs of strength in the world's largest oil consumer.
Asian buyers imported less than 1 million barrels per day (bpd) of Iranian crude for the first time this year in August, with Chinese buying reaching the lowest level since the easing of Western sanctions, although intake was still up 6.4 percent from a year ago.
Activity in China's vast factory sector showed signs of steadying in September as export orders climbed, a private survey showed on Tuesday, easing fears of a hard landing but pointing still to a sluggish economy that faces considerable risks.
Japan's domestic oil product sales fell for a fifth straight month in August from a year earlier, down nearly 10 percent to 2.91 million bpd, trade ministry data showed on Tuesday.
Also pressuring prices in recent months has been the strength of the dollar, with the dollar index set for its biggest quarterly gain in six years.
A stronger dollar dampens appetite for oil for holders of other currencies as it becomes more expensive.
Providing some support to prices, a strike has trimmed Libya's oil output by 25,000 bpd to 900,000 bpd, a spokesman for state-run National Oil Corp (NOC) said on Sunday, but production is still well up from a low of around 200,000 bpd earlier in the year.
An increase in Libyan production has hammered Brent's premium over U.S. crude in recent weeks. The premium narrowed to the smallest in 13 months, touching $2.52 a barrel, from above $9 per barrel in August and above $19 in November.
The market was awaiting weekly oil data from the American Petroleum Institute later in the day.
U.S. commercial crude oil and distillate stockpiles are forecast to have increased in the week ended Sept. 26, while gasoline inventories probably fell, a preliminary Reuters survey of four analysts showed on Monday.
Comments
Comments are closed for this article.