Brent crude slipped below $103 a barrel on Wednesday to trade at its lowest level in more than a year as ample supplies counter disruption risks posed by tensions in Iraq and Libya.
It was the fourth day of losses for the benchmark and comes after the International Energy Agency (IEA) pointed to well-supplied global markets and a glut in the Atlantic Basin.
Output from the Organization of the Petroleum Exporting Countries (OPEC) rose to a five-month high of 30.44 million barrels per day (bpd) in July, as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.
September Brent crude fell 57 cents to $102.45 a barrel by 0649 GMT. The contract, which expires on Thursday, fell as low as $102.37, the weakest for a front-month since July 1, 2013.
U.S. crude was down 17 cents to $97.20 a barrel, slipping for a second straight session.
Energy prices have retreated in view of OPEC’s ability to ramp up production and the absence of negative news on supplies despite the political conflicts, said Ben Le Brun, markets analyst at OptionsXpress in Sydney.
The unrest in Iraq has yet to disrupt supplies from the No. 2 OPEC producer even as the Obama administration has sent about 130 additional military personnel to the country as Washington seeks to help Baghdad contain the threat posed by hardline militants from the Islamic State.
“Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon,” said chief market analyst Ric Spooner of CMC Markets.
He added that the IEA report served as a reminder that demand has weakened and inventories are substantial.
CHINA DEMAND
China’s July implied oil demand fell 2 percent from a year earlier to 9.57 million bpd, according to Reuters’ calculations based on preliminary government data.
Industrial output in the world’s No. 2 economy and second-largest oil consumer rose 9 percent in July from a year earlier, as expected, while retail sales climbed 12.2 percent, a shade below forecasts, the National Bureau of Statistics said on Wednesday.
“The data released today was a miss on expectations … Forecasts are getting more and more optimistic,” said Le Brun.
“We have not seen a huge reaction across risks assets at this stage. It just tells you that people are comfortable with the numbers coming out of China at this stage.”
While recent China data has pointed to strong manufacturing activity and exports, a weaker services sector and imports suggest more stimulus measures from Beijing may be needed to ensure a sustained recovery.
In the United States, the Energy Information Administration will release its weekly crude stockpiles report. The agency said on Tuesday that U.S. crude oil production had averaged an estimated 8.5 million barrels per day (bpd) in July, the highest level since April 1987.
Data from industry group American Petroleum Institute showed that U.S. crude inventories had risen 229,000 barrels in the week to Aug. 8 to 364.2 million, in contrast with analysts’ expectations for a decrease of 2 million barrels
Reuters
