Brent slips towards $102/b

Oil-world21 August 2014 – Brent edged down toward $102 a barrel on Thursday, near the 14-month low hit earlier this week, as concerns over excess oil supply and slowing demand weighed on prices.

A survey on China’s factory activity showed that growth in the sector slowed to a three-month low in August, adding to concerns about softness in the Chinese economy that could depress oil use in the world’s second-largest oil consumer.

“This is a figure which indicates that growth is likely to be reasonably moderate and any upside to current expectations about China will be possibly muted,” said Ric Spooner, chief analyst at CMC Markets in Sydney.

“It will be generally a negative for commodities.”

Brent crude for October dropped 24 cents to $102.04 a barrel early on Thursday after posting a 72-cent gain in the previous session.

US. crude is trading near its lowest since January at $93.38 a barrel, down 7 cents, after the front-month contract shifted to October.

Signs of slowing economic growth across the globe have fuelled concern that there is more oil than the market can absorb.

Brent has fallen more than $10 a barrel since mid-June as investors saw less risk of supply disruption in Iraq and Libya.

Libya has resumed exports from its largest port while top exporter Saudi Arabia raised its output in July to 10 million barrels per day.

“I don’t think we’ll see a significant tightening of supply in the near term,” Spooner said, adding the trend for Brent was down, with the next support levels at $99.75 and $96.75.

A larger than expected drop in US crude inventories last week buoyed West Texas Intermediate and helped the September contract rise $1.59 a barrel on its last day of trade.

“The draw is moderately encouraging but overall inventories are still very large,” Spooner said.

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