Brent holds steady at just below $100

Demand concerns continue due to weakness in Europe, tension between Iran and West remains
Brent holds steady at just below $100
OIL PRICES: The Brent-Dubai exchange for swaps for October were unchanged at $2.10 a barrel. (Getty Images)
By Reuters
Thu 05 Jul 2012 09:55 AM

Brent futures were steady below $100 a barrel in early Asian trade on Thursday as fresh evidence of weakness in European economies triggered demand concerns, even as investors kept up hopes for stimulus measures to counter fragile global growth.    

Traders were also closely monitoring developments in Iran for early signs of shipment disruptions as tensions between Tehran and the west remained high, while a lack of resolution to an oil workers' strike in Norway underscored concerns over supply from the North Sea.

Brent crude edged 12 cents higher to trade at $99.89 per dollar at 0245 GMT.

U.S. crude futures were trading 66 cents lower at $87, after dropping to a session low of $86.50 on expectations of ample supply in the world's biggest consumer.

"The big picture has not been fixed and overall it's still looking quite bearish on oil demand growth," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.

"Of the three big economic blocs - the European Union is facing recession, the United States is struggling ... and the latest data seems to be showing that China's economy is slowing down considerably."

Traders were awaiting the outcome of the European Central Bank's monetary policy meeting later in the day and U.S. non-farm payrolls data on Friday for further cues.

The Bank of England may announce a third round of stimulus on Thursday after a raft of weak data and the ECB is expected to cut interest rates to a record low, which could boost growth and demand for oil.

All of Europe's biggest economies are in recession or heading there and show little sign of improvement soon, surveys showed on Wednesday, backing the view that the region's central banks are poised to ease policy.

Payroll data from the U.S. may show that employers increased hiring in June, but the rise may not be enough to dispel concerns about the slowing economy, which may  drag down crude prices further.

"Today's quiet session could be the calm before the storm not only because monetary decisions from the ECB and BOE will be released tonight but also due to the fact there are a lot of important economic data due in the next two days," Miguel Audencial, a sales trader at CMC Markets wrote in a report to clients on Wednesday.

Traders were also awaiting weekly data on U.S. crude stockpiles from the Energy Information Administration (EIA) due on Thursday, delayed by a day because of the Independence Day holiday.

Shipments from Norway have slowed as a second round of talks to resolve a strike in the oil sector, failed this week, leading to worries that the near two-week old conflict could drag on.

Labour unions plan to meet on Friday to decide whether to escalate the strike, hitting more oil fields. Norway is the world's eighth-biggest exporter.

Investors were also on high alert as tensions between Iran and the west stayed high. Tehran has been threatening to block shipments through the Strait of Hormuz, through which more than a third of the world's sea-borne oil trade passes, in response to increasingly harsh sanctions by the United States and its allies aimed at forcing it to curb its nuclear research programme.

The sanctions have prompted Kenya to cancel an agreement to import 4 million tonnes of Iranian crude oil per year.

Japan will not import any crude from Iran in July, sources told Reuters.

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