Brent crude oil declined towards $101 a barrel today on signs of ample supplies and slowing demand in China.
Reuters reported that Brent crude for October was down 90 cents at $101.38 a barrel this morning while US crude traded near its lowest since January at $92.50 a barrel, before picking up slightly to approximately $92.75.
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Brent has declined by more than $10 a barrel since June, but global investors are now more concerned by the weak demand. This comes at a time when the outlook for supply is almost stable, irrespective of the political conflicts across the globe.
Reuters quoted Russian bank VTB Capital oil strategist Andrey Kryuchenkov as saying that the conflict in Iraq has had only a limited effect on producing and transporting facilities.
Kryuchenkov said: "At the same time, lagging European demand and the seasonal lull in Asia continue to weigh on sentiment."
Exports have restarted from Libya’s largest port and Saudi Arabia increased its production in July to 10 million barrels per day.
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By GlobalDataMeanwhile, a survey on factory activity in China found that growth in the sector slowed to a three-month low in August.
The slow-down in economic growth could reduce oil use in China.
The fall in Brent towards $100 has stirred talk that the Organization of the Petroluem Exporting Countries (OPEC) may plan a cut in output; however, delegates from the OPEC expect to see higher seasonal demand in the next few weeks.
Last week’s larger drop in crude inventories buoyed West Texas Intermediate and aided the contract in September to gain $1.59 a barrel on its final trading day.
