Investors fear global oil demand will slide amid the bleak economic outlook
Brent crude futures slipped below $109 on Thursday, sliding for a fifth straight session in its longest losing streak since June, on concerns global oil demand will slide as the economic outlook for Europe and the United States worsens.
A slew of developments overnight, from Germany and France asking Greece to decide if it wants to stay in the eurozone, a slide in a key European manufacturing indicator to the US Fed slashing growth forecasts have renewed investor concerns that the global economic outlook may worsen.
"Crude prices are going to be capped by the uncertainty in the global economy, driven by the eurozone crisis which I don't think will be resolved by this year," said Jeremy Friesen, a commodity strategist at Societe Generale.
"I don't think the eurozone is in recession, but the data clearly highlights the danger of a recession."
Brent crude for December traded 71 cents lower at $108.63 at 0308 GMT, after slipping to as low as $108.40. In the previous session, it ploughed through its 100-day moving average at $111.19 to hit a session high $111.47. US crude slipped $1.07 to $91.44 a barrel.
The leaders of Germany and France told Greece it would not receive another cent in European aid until it decides whether it wants to stay in the eurozone.
"It's clearly a worse situation as it is putting other eurozone members in a corner," Friesen said.
That announcement came as the final Markit Eurozone Manufacturing Purchasing Managers Index (PMI) for October, which gauges changes in activity levels across thousands of eurozone manufacturers, fell to 47.1, revised down from a preliminary reading of 47.3 and down from 48.5 in September.
This marks the third consecutive month the manufacturing PMI has been below the 50 level that divides contraction from growth. Output and new orders indexes plunged to levels not seen since mid-2009.
On other side of the Atlantic, the US Federal Reserve slashed its forecast for growth, raised projections for unemployment and said it was mulling the possibility of buying more mortgage debt to spur a struggling recovery.