Saturday 12 July 2014
 
»
 
»
Story

Brent above $108, investors await ECB meeting

Singapore, October 4, 2012

Brent futures steadied above $108 a barrel on Thursday after a sharp drop in the previous session, with investors waiting for a European Central Bank policy meeting and critical jobs data out of the US this week for more trading cues.

Concerns about weak oil demand stoked by data from China suggesting a delayed recovery and from the euro zone pointing to recession dragged markets lower on Wednesday, pulling down brent futures by 3 per cent.

"The markets have reacted primarily to what appears to be a steady stream of weak economic data out of China and the euro zone as well; the fundamentals point to near-term weakness," said Victor Shum, a senior partner at oil consultancy IHS Purvin & Gertz in Singapore.

"In the immediate term, some investors could see a buying opportunity after the sharp drop yesterday, so there could be a turnaround today."

Front-month brent futures added 23 cents to $108.40 per barrel at 0244 GMT. Brent fell to $107.67 on Wednesday, their lowest since September 20 and could find support at $106.69.

Nymex crude for November delivery rose 8 cents to $88.22 a barrel. It had plunged 4 per cent on Wednesday in its biggest daily drop since June 21.

Even as economic worries in Europe and China kept investors jittery, data from the US offered a ray of hope, with private employers adding more jobs than expected in September and new orders helping a pick-up in the service sector.

This data precedes more-widely followed jobs numbers from the US Labour department on Friday, which is expected to show a slight improvement from the previous month.

Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 per cent, according to a Reuters survey.

In Europe, policymakers at the ECB may focus on whether to lower interest rates to support a recession-bound economy.

WEAKNESS EVERYWHERE

Economic worries remained in the forefront of all asset markets this week as a series of surveys across the world pointed to increasing weakness, casting doubts over the still-fragile recovery.

Wednesday's data showed that the service sector in the euro zone has declined even further, diminishing chances that the region will see growth before next year.

Even China's normally robust services sector weakened to a two-year low in September, as the impact of the slowdown in the export-focussed nation's biggest customers hit home.

The service sector data came on the heels of manufacturing numbers earlier in the week, which showed factory activity in the euro zone fell to its lowest since early 2009, while China showed signs of having lost its growth momentum.

Besides growth concerns, investors are also fretting about the deepening euro zone crisis. Greece is struggling to strike a deal with its lenders on disputed austerity cuts, while Spain is expected to be the next nation to request a bailout.

Over the next five weeks, "oil prices might be weaker, dominated by uncertainties and concerns over Spain, further concerns on whether the Chinese economy is stabilising or sliding, and by a general sense of economic inertia", Barclays analysts said in a report.

After five weeks, oil markets will be driven by the outcome of the US presidential election and geo-political concerns, they added.

IRAN, SYRIA

Geo-political concerns include the still simmering dispute in the Middle East over a nuclear programme in Iran that triggered tough sanctions from the United States and the European Union and plunged the Iranian rial to a record low this week.

Adding to the tensions is social unrest in Iran over the weakening currency, the proverbial last straw for its citizens who are already reeling under the impact of the sanctions.

Elsewhere, Turkey's military hit targets inside Syria after mortar bomb fired from Syrian territory killed five Turkish civilians, marking the most serious cross-border escalation of the 18-month uprising in Syria. – Reuters




Tags: Brent | Singapore |

More INTERNATIONAL NEWS Stories

calendarCalendar of Events

Ads

Buy high quality China wholesale Health & Beauty , Electronics, Sports & Outdoors , Computers, Video Games, Toys & Hobbies Cell Phones, Automobiles and other wholesale products directly from reliable Chinese wholesalers or Factories on DHgate.com