10 October 2014, News Wires – Brent crude futures tumbled nearly $2 to below $89 per barrel on Friday, trading at their weakest since 2010, as rising supply and a weakening global economic outlook stretched a months-long slump in oil prices.
US crude also slid by more than $2 to hit its lowest since 2012, ratcheting up pressure on OPEC to slash output to rescue prices in the face of slow demand.
“I think we’ve arrived at a pivotal support level for both Brent and West Texas Intermediate. $85 is the area where OPEC has intervened in the market in the past,” CMC Markets chief market analyst Ric Spooner told Reuters.
“I’m not saying they will come in this time. They need to consider the overall supply situation – it might be too expensive.”
Brent crude for November delivery was down $1.75 at $88.30 per barrel by Friday morning, after falling earlier to $88.11 – its lowest since December 2010.
US November crude dropped $2.03 to $83.74 per barrel. The contract, also known as West Texas Intermediate (WTI), hit a session low of $83.59, its lowest since July 2012.
Brent is on track for a third straight weekly loss and WTI is on course for its sharpest weekly fall since June 2012 with a loss of nearly 7%.
Oil prices extended steep losses from Thursday that were fuelled by dismal data from Germany which showed exports from Europe’s top economy falling in August by the most since January 2009.
Brent has fallen nearly 24% since hitting this year’s high of $115.71 in June as geopolitical risks from the Middle East to Ukraine failed to disrupt oil supplies, while output from key producers such as Libya improved.
US crude inventories also soared far more than expected last week on higher imports and as refineries cut output.
“In terms of the overall momentum of the market it could keep falling although I don’t think it will overshoot too far,” Spooner said.
The relentless decline in oil prices prompted investment bank Barclays to slash its average fourth-quarter forecast for Brent to $93 per barrel from $106 previously. It also cut its estimate for WTI to $85 from $98.
Brent’s next support level is at $88.02, the 276.4 percent Fibonacci projection level, Reuters market analyst Wang Tao told Reuters, while that for WTI is at $81.68.
Supply is rising at a time when demand conditions are weakening.
Apart from Europe, second largest oil consumer China is also seeing signs of a slowdown.
Data due next week is forecast to show that softer domestic demand probably slowed growth in China’s imports, investment and retail sales to multi-month or multi-year lows in September.
Calls for members of the Organization of the Petroleum Exporting Countries to curb output have been mounting since oil prices fell below OPEC’s preferred level of $100 a barrel although some members have shrugged off the decline.
Ecuador’s Oil Minister Pedro Merizalde said on Wednesday that current oil prices are normal given an increase in US production, and that they will be discussed at the OPEC meeting in late November.