BW Communities

Oil Sinks Below $100 On Economy, Demand Worries

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Oil fell below $100 a barrel on Friday for the first time since October 2011 as weak manufacturing data from China and the euro zone debt crisis raised concerns of a slowdown in demand for fuel. China's official Purchasing Managers' Index eased to 50.4 in May, the weakest reading this year. Germany's manufacturing sector contracted at the fastest pace for almost three years, and the euro fell to a 23-month low against the dollar on worries about the Spanish banking sector. "We've had constant worries about Greece, Spain, the euro, poor data from the US, and overnight the Chinese data was not positive," said Tony Machacek, an oil futures broker at Jefferies Bache. "I think we are getting to levels where we might see a bit of stability coming back to the market." Brent crude was down $1.80 to $100.07 by 0958 GMT after earlier hitting a session low of $99.60, its weakest since Oct. 4. It dropped 14.7 per cent in May, the biggest monthly decline since 2008. US oil slipped $1.45 to $85.08 after losing more than 17 per cent last month, also its biggest slide since 2008. The Chinese data comes ahead of a US employment report, which is expected to show non-farm payrolls increased 150,000 in May from 115,000 in April. Some saw scope for disappointment in the report. "I don't think Friday's numbers are going to be any better. It's been a dismal week so far, and we haven't hit bottom," said Jim Ritterbusch, president at Ritterbusch & Associates and who predicted the drop in Brent below $100. SAUDI GETS ITS WISH Brent surged in March to $128 a barrel, the highest since 2008, as increased concern over the loss of Iranian oil due to tighter sanctions combined with supply hitches elsewhere. The price rise worried both oil consuming and producing countries. Saudi Arabia, the top oil exporter, has been raising output and said repeatedly it wanted prices of around $100. "We want a price around $100, that's what we want," Saudi Oil Minister Ali al-Naimi said on May 13. "A $100 price is great." The kingdom, OPEC's biggest producer, raised output to 10.1 million barrels per day in May, according to a Reuters survey this week, its highest in decades. Overall OPEC oil supply is at the highest since 2008. Brent's premium to US crude was at $14.83. High US inventories have been weighing on the US benchmark. US crude inventories rose more than expected last week to hit their highest level since July 1990, the US Energy Information Administration said. (Reuters)