Oil price falls to $103 on steady supply
London, August 14, 2014
Brent oil fell by more than $1 to $103 a barrel, just above its year low, as higher US jobless claims and a German economic contraction highlighted weak demand, while supplies are ample despite conflicts in Iraq and Libya.
The number of Americans filing new claims for unemployment benefits rose more than expected last week, figures showed on Thursday, while four-week average levels were also up.
Germany's economy shrank in the second quarter and France posted no growth, data showed, adding to jitters as the euro zone trades tit-for-tat sanctions with Russia over the crisis in Ukraine.
"We are seeing general weakness in oil, not only because of (ample) supply but also on the demand side," said Abhishek Deshpande, oil analyst at Natixis.
Brent crude for delivery in September was down $1.27 at $103.01 by 1330 GMT. The contract, which expires on Thursday, hit $102.37 on Wednesday, its weakest since July 2013.
The October Brent contract was trading down $1.25 at $103.85 while US crude for September delivery was down 58 cents at $97.01 a barrel at a $6 discount to Brent.
Despite fighting by rival armed factions in Libya, exports are resuming at top ports Ras Lanuf and Es Sider which have been blocked for a year by protests.
A tanker carrying 670,000 barrels of Sirtica crude left Ras Lanuf on Tuesday and a National Oil Corporation official said on Thursday that Libya was set to resume oil exports from Es Sider in "a few days".
In Iraq, Opec's second largest producer, advances by Islamic State militants in the north of the country have had little impact on output from its southern oilfields.
"The supply outlook has been pretty rosy. Opec production has been pretty good. Supply in Iraq is unaffected," said Phin Ziebell, economist at the National Australia Bank (NAB).
"The situation in the North is desperate but the reality is the majority of the crude production is concentrated in the south of the country," Ziebell said.
US crude inventories rose by 1.4 million barrels last week, data from the Energy Information Administration (EIA) showed on Wednesday, against analysts' expectations for a 2 million-barrel drop.
Crude output by the world's top oil consumer is also expected to rise, the EIA said, as it raised its estimate for 2014 US output to 8.5 million barrels per day (bpd) and to 9.3 million bpd for next year, which would be the highest annual average production level since 1972.
Data on Wednesday from China, which included a 6 per cent fall in its July implied oil demand from June, added to weak sentiment. – Reuters