22 September 2014, News Wires – Brent crude fell below $98 per barrel on Monday, down for the third session in four, as sluggish demand and abundant supplies outweighed a possible cut in oil output from Opec.
Comments from OPEC’s secretary general last week that the group could cut output next year buoyed Brent on Friday, but investors’ attention turned back to the gloomy economic outlook in Europe and China which has curbed oil demand.
US crude for October delivery fell $0.28 cents to $92.13 per barrel, ahead of the expiry of the contract at the end of Monday.
“When you look at the increase in supplies in the past year, you see very strong growth in the US in particular from non-conventional sources and also in other non-OPEC producing areas … supply growth is not being driven by OPEC,” National Australia Bank (NAB) economist Phin Ziebell told Reuters.
OPEC members, some of whom require oil prices at above $100 to meet budgetary needs, will review the organisation’s oil output policy at its next meeting on 27 November.
Investors will focus on China’s flash manufacturing PMI reading due out on Tuesday for more cues on where the world’s second-largest economy is heading.
The world’s top energy consumer reported earlier this month the slowest factory output growth in nearly six years, partly causing Brent to slump under $97, the lowest in more than two years.
Concerns over an extended stagnation in Europe that could pull the other economies down was highlighted at the G20 meeting in Australia on Sunday.
“The overall story is of abundant supply and very slack demand being coupled with an increasing lack of nervousness about geopolitical tensions in the Middle East and the Ukraine,” Ziebell said.
In signs that western sanctions could impact Russian oil and gas production in the long run, ExxonMobil said on Friday it will wind down drilling in Russia’s Arctic in the face of US sanctions targeting Western co-operation with Moscow’s oil sector.
French jets struck a suspected Islamic State target in Iraq for the first time on Friday, expanding a US-led military campaign against militants who have seized a third of the country and also control large parts of neighbouring Syria.
Fighting has also intensified in southern Libya as soldiers and police clashed in the last few days near the country’s biggest oilfield El Sharara.
The field was shut last week because of damage to a storage facility at the Zawiya refinery in the north, which it feeds.