Thursday 19 April 2018

Brent slips below $100, first time in a month

Singapore, June 3, 2013

Brent futures slipped below $100 a barrel for the first time in a month on demand growth concerns after factory activity data from China pointed to momentum slowing in the world's second-biggest oil consumer.
The HSBC/Markit Purchasing Managers' Index (PMI) for China fell to 49.2 in May, shrinking for the first time in seven months as both domestic and external demand softened.
The decline led oil to extend Friday's losses, when it came under pressure from falls in major US equity indices, ample supplies and technical selling.
Brent crude traded 15 cents lower at $100.24 a barrel by 0307 GMT, after falling to $99.75, the lowest since May 2. It is down 16 percent from a year high of $119.17 touched in February, and has fallen for fourth straight months. US oil fell 17 cents to $91.80.
"The market remains biased to further downside," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "We may see seasonal pick-up in demand, but if you look at the overall annual demand, there is more than enough supply to meet that."
Spooner expected Brent to trade between $96.75 and $98.75 a barrel over the next few days, with strong resistance around $102 and $103. The US benchmark may stay around $90-$92.50.
The latest China number adds to recent evidence the country's economic growth is slowing. The official PMI for the non-manufacturing sector fell to 54.3 in May, the lowest since September last year. The Chinese government's official manufacturing PMI, released on Saturday, rose but remained close to 50.
The slowing numbers come amid a commitment by the Organization of the Petroleum Exporting Countries on Friday, which pumps a third of the world's oil, to keep its output target unchanged at 30 million barrels per day (bpd) for the rest of the year.
Along with rising US shale oil production, the steady output target and a bleak global demand growth outlook will weigh on sentiment.
A Reuters poll forecast Brent will slip further this year and next as uncertainties over Chinese growth and a gloomy European economic outlook depress demand while supplies improve.
But US light crude futures are likely to rise a little as a supply overhang in the Midwest of the United States clears, narrowing the spread between the two global crude benchmarks.
Brent's premium to US oil is seen at $12.90 in 2013, falling to $9.60 in 2014, the poll showed. - Reuters

Tags: China | Oil | Brent |

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