Brent slips further below $109 on demand growth concerns, stockpiles

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Brent futures slipped further below US$109 a barrel on Thursday on a revival of concern over demand growth in top two oil consumers China and the United States, while a strengthening dollar added pressure on prices.

Comments by China's central bank on stabilising inflation expectations reinforced investor worries it may drop its pro-growth policy before economic expansion gathers full momentum, weighing on most markets in Asia. Oil faced further pressure as the International Energy Agency cut its global demand outlook.

Brent crude slipped 12 cents to US$108.40 a barrel by 0431 GMT, dropping for the fifth straight day. US oil declined 25 cents to US$92.27, extending losses for a second day.

"The IEA's report noted a subdued rate of growth in demand and that is probably weighing," said Natalie Rampono, commodity strategist at ANZ in Melbourne. "But what the market is trying to focus on is China's tightening policy. A lot of people have been pricing in a strong pickup in oil demand from China this year and some of those expectations may be pared back."

Prices, particularly the US contract, were also under pressure as crude inventories in the world's largest oil consumer rose last week, data from the Energy Information Administration showed on Wednesday.

Crude inventories rose 2.62m barrels in the week to March 8, compared with analysts' expectations for a rise of 2.3m barrels. The rise came as crude imports increased by 227,000 barrels per day (bpd) to 7.49m bpd.

Refinery utilization fell 1.2 percentage points to 81.0 percent of total capacity, EIA data showed, compared with expectations for a rise of 0.2 percentage point.

Oil markets are also under pressure from a stronger dollar. The US dollar hovered near seven-month highs against a basket of currencies on Thursday.

The dollar index stood at 82.845, after climbing as far as 83.055 on Wednesday, as US retail sales rose at their fastest clip in five months in February. The report is the latest in a string of data putting the world's biggest economy well on the recovery path.

A stronger dollar can make oil more expensive for holders of other currencies.

The IEA, which coordinates the energy policies of major consuming nations, said in its monthly oil market report it remained bearish on oil demand for 2013 and trimmed its outlook for oil demand growth by 20,000 bpd to 820,000 bpd.

"The subdued growth rate of oil demand now looks increasingly entrenched in the face of high oil prices and weak economic growth," it said.

Brent is expected to break support at US$107.85 per barrel and fall further to US$106.49, while US oil is expected to drop into a range of US$90.91 to US$91.40 as a rebound from the March 4 low of US$89.33 has been completed.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Petroleum producers shift attention from Middle East: Kemp

Petroleum producers shift attention from Middle East: Kemp

Following four decades of war, sanctions, nationalisation and...

Gold industry shifts east as Dubai plans huge refinery

Gold industry shifts east as Dubai plans huge refinery

$60m refinery being built by Kaloti Precious Metals in Dubai...

Dubai gold dealers shun Turkish bars on fear of links to Iran

Dubai gold dealers shun Turkish bars on fear of links to Iran

Trade in Turkish gold bars to Iran via Dubai is drying up as...

2
Most Discussed
  • 16
    Baby NOT on board?

    The people commenting here were all 20 years old when they were born, never cried, never screamed and never ran etc etc.
    more

    Thursday, 21 August 2014 8:30 AM - Amer
  • 2
    European court backs French ban on full-faced veil

    well said John Harte, it is the total opposition to freedom of expression, it degrades and dehumanizes women into objects that need to be wrapped up and... more

    Friday, 22 August 2014 6:38 PM - Polly Nicoll
  • 23
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 17
    UK looks to close tax loophole on expat landlords

    UK taxes too much and too complicated and time taking and confusing and continuous. Returns, lawyers, HMRC, taxes too much for too little. Not worth the... more

    Sunday, 17 August 2014 12:40 PM - AbdolRahman
  • 16
    Baby NOT on board?

    The people commenting here were all 20 years old when they were born, never cried, never screamed and never ran etc etc.
    more

    Thursday, 21 August 2014 8:30 AM - Amer