Sunday 13 July 2014
 
»
 
»
Story

Brent below $100 for 1st time since July

Singapore, April 16, 2013

Brent crude sank below $100 a barrel for the first time in nine months on Tuesday amid a wider commodities rout, with investors making a beeline for the exits after recent weak data from China and the United States fuelled worries about oil demand.

Gold plunged to a more than two-year low, while oil shed over $2 in what analysts said were indications that a host of weak fundamental signals dominated sentiment.

Brent crude for June delivery dropped $1.63 to $99 per barrel, after falling to as low as $98.00 - the lowest since July 2012. Brent, which dropped for a ninth session out of eleven, has shed more than $7 since April 9.

US crude for May delivery fell $1.77 at $86.94 a barrel, after hitting a low of $86.06, its weakest since December 2012. The prices were set for their longest losing streak also since December.

"Fundamentals were not strong at the start of the year but yet (investors) focused on all the bullishness in the market. But as the year went on, it got steadily more bearish and I think (the China data) was the final nail in the coffin," said Tony Nunan, an oil risk manager at Mitsubishi Corporation in Tokyo.

"Europe is a mess and that was a foregone conclusion, then we got the poor non-farm numbers and that took away all the optimism off the US economy and now with China not growing as fast as people thought everybody is turning bearish."

Oil prices slipped about 3 per cent on Monday after data showed economic growth in the world's No 2 oil consumer China unexpectedly slowed in the first three months of 2013, dropping to 7.7 per cent from 7.9 per cent in the final quarter of last year and falling short of expectations for an 8 per cent growth.

This rattled oil markets already spooked by forecasts for lower global oil demand growth for 2013 released last week by the International Energy Agency, the US Energy Information Administration and the Organisation of the Petroleum Exporting Countries.

China's implied oil demand fell to its lowest in seven months in March, while crude oil stockpiles in the United States have ballooned to a 30-year high as domestic output surges.

Adding to the gloom was a US regional manufacturing report showing the pace of growth slowed more than expected in April. This comes on the heels of last week's bleak retail sales data and suggests the world's largest economy had lost some steam heading into the second quarter.

Punctuating the bearish mood, Goldman Sachs, one of the most influential banks in commodity markets, recommended clients close their bets on rising Brent prices, warning the market could continue to fall.

Reports of two explosions at the finish line of the Boston Marathon killing three people and injuring more than 100 also unnerved investors. Selling in US equities had accelerated late in the session after the news on Monday.

The market was now waiting for weekly oil inventory data from top consumer the United States for trading cues.

A preliminary survey of analysts by Reuters forecast US crude stocks rising by 1.4 million barrels for the week ended April 12. In the previous week, inventories rose slightly to hit the third highest level since records began in 1982, government data from the Energy Information Administration showed.

"For oil, the fundamentals are not strong... the market looks oversupplied so what has to happen is that Opec has to cut production to shore up the market," Nunan said.

"I do think there are a lot of supportive factors still in the market. Geopolitical risks are always there and have not disappeared but just are not in the focus now... Once Iranian elections are over in June, then we might have the whole problem with the Iranian nuclear development." – 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