Oil prices sink lower

15 September 2014 – US crude futures fell more than $1.50 a barrel to below $91 in early Asian trade on Monday over concerns that new sanctions against Russia will weaken oil demand amid ample supplies and a strong dollar.

US crude was down $1.32 a barrel at $90.95 early on Monday after hitting a session low of $90.63. It settled 56 cents a barrel down at $92.27 on the previous session.

ICE Brent futures for October also lost 84 cents a barrel to $96.27. On Friday, it ended 97 cents a barrel lower at $97.11.

dv794046The contract expires on Monday, adding to pressure as traders roll positions. The November contract lost 87 cents a barrel at $97.09 after it ended 90 cents lower at $97.96 a barrel previously.

On Friday, the US imposed sanctions on Gazprom , Gazprom Neft, Lukoil, Surgutneftegas and Rosneft, banning Western companies from supporting their activities in exploration or production from deep-water, Arctic offshore or shale projects.

The new measures, designed to put further pressure on President Vladimir Putin over Russia’s actions in Ukraine, are a major broadening of the previous sanctions, which only banned the export of high technology oil equipment into Russia.

“Prices in both markets are expected to remain weak as northern hemisphere refineries schedule maintenance in September/October, keeping crude demand low,” Australia and New Zealand Banking Group said in a daily report on Monday.

“However, the transition to heating fuels later in the year will likely support a stronger price as low inventories of these fuels are replenished.”

On Thursday, the International Energy Agency’s (IEA) monthly report said global oil demand growth is softening at a remarkable pace due to weaker European and Chinese economies, while adding that rising volumes of oil in storage was a good cushion against supply shocks.

Also Libya’s oil industry is making a comeback as oil output has reached 810,000 barrels per day, according to state-run National Oil Corporation last week. The Opec member used to pump 1.4 million bpd until July 2013 when a wave of protests broke out at oilfields and export terminals over financial and political demands.

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