• Monday, February 26, 2024
businessday logo

BusinessDay

Brent oil slips below $109 as severe winter eases

businessday-icon

Brent oil slipped below 109  dollars a barrel on Friday due to expectations that demand growth will slow as severe winter weather eases, although supply worries curbed losses for now.

The combination of severe winter in the U.S. and Europe along with worries over Middle East supply disruptions have supported prices in the early part of the year.

The situation has helped the oil market avoid the weakness seen in other risk assets such as base metals.

Brent crude slipped 11 cents to 108.85 dollars a barrel, after dropping 56 cents in the previous session.

The contract is set to end the week down one per cent, the biggest drop in four weeks, it has gained more than two per cent in February.

U.S. oil dropped 31 cents to 102.09 dollars and is set to end the week slightly lower, snapping six straight weeks of gains – the longest weekly winning spree in a year.

WTI crude is up nearly five per cent for the month.

“Oil is different from other risk markets because of the winter and Middle East geopolitical tensions,” said Jonathan Barratt, chief executive of commodity research firm Barratt’s Bulletin in Sydney.

“As the weather improves, some shine on that will come off. China’s slowdown will compound it even more. The markets shouldn’t be here.”

The U.S. benchmark is set to slip to below 100 dollars a barrel, Barratt said.

Global spare oil production capacity inched higher in January and February as demand eased, the U.S. government said.

The Energy Information Administration (EIA) said spare output capacity averaged 2.1 million barrels per day in the last two months or about 100,000 bpd higher than in the previous 60 days.

U.S. oil production surged in 2013 to the highest level in 25 years as a boom in shale drilling boosted output, the EIA also said.

Reuters