Brent crude fell more than a dollar to below $101 a barrel
on Tuesday, pressured by growing fears that a Greek debt default could spread
and ignite a global recession.
The global economic woes coincide with faster-than-expected
Libyan efforts to restore its oil output, causing some investors to tread more
carefully amid possible weaker fundamentals.
Brent crude for November delivery fell $1.05 to $100.66,
after hitting an intraday low of around $100.50 a barrel, which was within
striking distance of an eight-week low at 0441 GMT.
US crude fell $1.30 to $76.31 a barrel after reaching an
intraday low of $75.92.
Libya will start pumping crude at two major oilfields in about
two weeks, doubling production to 700,000 barrels a day by year-end, the
country’s head of National Oil Corp Nouri Berouin said in an interview with
Reuters.
While the resumption in operations at Repsol-operated
Sharara field and Eni part-owned Elephant will help boost output, Berouin said
Libya’s biggest oil terminal at Es-Sider may take more than a year to be fully
repaired.
“Brent crude continues to feel the weight of economic
concerns as it appears that Greece will miss deficit targets and worries about
the health of European banks remain,” J.P. Morgan said in a research note.
A bearish target at $99 per barrel remains intact for Brent
oil, said Reuters market analyst for commodities and energy Wang Tao, while US
oil faces a support zone of $75.68-$75.71, and may rebound to $78 per barrel.
Apart from oil, world stock markets and the euro have also
tumbled this week on rising concerns the debt crisis in Greece could spread to
other countries and spark a global recession.
“I think more people are getting more afraid,”
Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.
“There’s a concern that there will be a mini financial
crisis. If they don’t do it properly, it will cause some banks in Europe to
fail, and there will be a domino effect,” he said, referring to European
leaders’ efforts to resolve Greece’s financial crisis.
Despite deeper cost-cutting measures, Greece admitted it
would miss its fiscal deficit target this year, sparking fresh doubts over a
planned second international bailout.
The crisis has forced investors to seek safe havens such as
gold and Treasuries, which has helped push the US dollar to its highest in more
than eight months against a basket of major currencies.
A stronger dollar can pressure dollar-denominated
commodities prices by making them more expensive to consumers using other
currencies.
While oil supply and demand appears largely balanced, United
Arab Emirates OPEC governor Ali Obaid Al Yabhouni has said there were
“ominous clouds on the horizon” for demand because of global economic
problems.
US commercial crude stockpiles are expected to have risen
for a second week as imports continued to increase, a preliminary Reuters poll
of analysts found on Monday.
Industry group the American Petroleum Institute will release
its weekly inventory report at 2030 GMT. The Energy Information Administration
will issue its own stocks data on Wednesday.
The impact of a fire at Royal Dutch Shell’s Singapore
refinery has extended into the crude and naphtha markets, strengthening price
spreads for both markets, traders said.
The closure of Shell’s 500,000 barrel-per-day refinery, its
largest in the world, has led the oil major to cancel the lifting of 4 million
barrels of crude, to wind down its petrochemical complex and to declare force
majeure on some of its deals, mostly involving distillates.
Follow us on
