Brent dips under $103 on demand fears

Oil prices13 June 2013, News Wires – UK Brent futures slipped under $103 a barrel on Thursday as a jump in US gasoline stocks with the summer driving season already underway stoked worries about demand, but a weak dollar helped stem the slide.

The US dollar stood near a four-month low against a basket of major currencies as investors cut bullish positions amid uncertainty over whether the country’s federal reserve would pare its stimulus programme. That helped cushion oil even though the market is fundamentally weak.

Brent crude slipped 71 cents to $102.85 a barrel by 0830 GMT, while US oil fell 79 cents to $95.09.

“The dollar is providing support to oil,” said Ken Hasegawa, a commodity sales manager at Newedge Japan. “Fundamentally, prices should go down because demand is weak. China and Europe are not doing good, while oil supplies are ample.”

The World Bank cut its outlook for global growth, saying the economy should expand more slowly this year than last due to a deeper-than-expected recession in Europe and a slowdown in some emerging markets, including China.

Hasegawa expects Brent to trade between $100 and $105 a barrel over the next few days, and US oil between $92 and $97, with prices influenced by demand uncertainty and the dollar.

While a weaker dollar would support oil, which is priced in the greenback, by making it cheaper for holders of other currencies, worries about growth in demand as stocks pile up in top consumer the United States will drag on prices.

Gasoline stocks on the US East Coast rose 2.9 million barrels last week to their highest level since February 2012, data from the US Energy Information Administration, EIA, showed. It also showed a build in crude oil stocks compared with a forecast of a draw.

The EIA data compounds a weak global demand outlook, already flagged by key reports earlier this week.

The International Energy Agency said modest economic growth was limiting oil demand worldwide, and that some developed economies would see absolute declines in oil consumption in 2013.

Both OPEC and the US EIA cut their global oil demand growth forecasts on Tuesday.

Yet, oil drew support from worries that geopolitical tensions may disrupt oil flows.

Libya is struggling to keep its oil output stable as protests cut exports. The state National Oil Corporation said output had slumped to less than 1 million barrels per day following the shutdown of two export terminals and a major oilfield.

In Syria, Western officials will meet the commander of the main force fighting President Bashar al-Assad on Saturday to discuss new aid, diplomats said, worrying investors the civil war may turn into a regional conflict.

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