Tuesday, September 02 14:10:44
Brent crude fell below $102 a barrel today, pressured by worries about slowing oil demand growth in China and Europe, a strong U.S. dollar and ample supplies.
Brent crude for October delivery was down $1.11 at $101.68 a barrel at 1144 GMT. U.S. crude was down 98 cents from Friday's close, at $94.98 a barrel after slipping as low as $94.95. There was no trading in the United States on Monday because of the Labor Day holiday.
"This break lower has been a long time coming," said Christopher Bellew, an oil broker at Jefferies in London.
Crude prices are under pressure due to a strong dollar, which was up 0.27 percent against a basket of currencies at 1145 GMT, discouraging economic data from Europe and China, and prospects of returning supplies in the North Sea.
Euro zone manufacturing growth slowed more than initially thought in August, while growth in China's factory sector slipped to a three-month low last month, adding to concerns about oil demand.
"The manufacturing data from Europe isn't looking good, and there are questions about Chinese demand," said Ole Hansen, senior commodity strategist at Saxo Bank.
There were also fears that an escalation of the conflict between Ukraine and Russia could lead to fresh sanctions, which are expected to impact energy demand more than supply.
"It could mean reduced economic growth and reduced demand. No one wants to go down that road because it has the potential of slowing growth, especially in exposed regions such as Europe," Hansen said.
At the same time, despite problems restarting Britain's Buzzard oilfield and a deterioration in the Libyan situation , supplies remained plentiful.
The North Sea's Buzzard field may attempt another restart later today, after going offline at the weekend. Buzzard is the biggest contributor to the Forties oil stream, one of the four crudes that underpin the price of Brent crude oil futures.
"We have to watch the Buzzard oilfield, but as long as we have plentiful supplies in the European market, the upside for Brent will be rather limited," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.
Fritsch said the market was now in a period of bottom-building, as the latest data from the Commodity Futures Trading Commission and IntercontinentalExchange showed that the net long position had stabilised. However, this follows a fall of more than 70 percent in net longs over the previous eight weeks.
"The fact that speculative investors have stopped selling should help oil prices form a bottom, but the plentiful supply prevents a meaningful and lasting recovery at least for now," he said.
Demand for physical crude has withered in recent months, creating a glut in Asia and the Atlantic basin and causing the futures market to flip into contango, in which oil for delivery in future is priced higher than that for immediate delivery. (Reuters)
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