Brent falls below $109

Brent crude oil17 February 2014, News Wires – Brent futures fell below $109 per barrel on Monday as disappointing US economic data revived demand growth concerns at the world’s top oil consumer, but strong consumption of heating fuels due to a cold spell kept losses in check.

US manufacturing output unexpectedly fell in January, recording its biggest drop in more than four-and-a-half years, in the latest indication the economy got off to a weak start this year, Reuters reported.

Worries over consumption may keep the two oil benchmarks trading in a narrow range as investors await more data due later in the week to gauge the global demand outlook.

Brent crude slipped $0.15 to $108.93 per barrel by Monday morning, after gaining to $109.40, Reuters said.

US oil gained $0.28 to $100.58.

“I don’t expect oil to rise or fall much from current levels,” Newedge Japan commodity sales manager Ken Hasegawa told Reuters. “The market is now looking for more economic indicators to gauge the outlook for oil demand, particularly from the US and Europe.”

Hasegawa expects Brent to trade between $108.50 and $110 per barrel during the day, with the US benchmark swinging in a $99.50 to $101.20 range.

Prices are also likely to remain range-bound, with thin volumes, because of a holiday in the US on Monday.

The next set of key data is the HSBC flash PMI survey of manufacturers for February, due on Thursday.

US manufacturing joined weak retail sales and employment data in suggesting that cold weather had spurred a step-back in economic growth early in the first quarter after a strong performance in the second half of 2013.

Investors are also awaiting minutes of the February policy meeting of the Federal Reserve due on Wednesday.

Fed chair Janet Yellen also has to appear before the Senate after her testimony was postponed due to bad weather, but no firm date has been set as yet.

In addition to the cold spell that is boosting oil demand in what is seasonally a weak consumption period, crude futures drew support from the dollar, which languished at a six-week low against a basket of major currencies.

Support also came from better Chinese data that showed banks disbursed the highest volume of loans in any month in four years in January, a surge that suggests the world’s second-biggest economy may not be cooling as much as some fear.

Supply disruption fears continued to put a floor on prices.

Libya’s oil production has fallen to 390,000 barrels per day as protests have partly blocked flows from the El Sharara oilfield, the state National Oil Corp said.

Protesters led by a former anti-Gaddafi rebel have seized three oil ports in eastern Libya since August, cutting off around 600,000 bpd of export capacity, to demand more regional autonomy and a greater share of oil wealth.

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