03 October 2014, News Wires – Brent crude futures rose towards $94 per barrel on Friday after a three-day slide pulled prices to their lowest since 2012, but the overall bearish tone appears intact amid ample supply.
The crude benchmark is set to end lower for a fourth week in five, having fallen more than 15% this year as global supplies have remained high despite rising conflict in the Middle East.
“I think the market is being complacent about the risks. There’s no premium that’s being worked into the price and that sort of sends a bit of worry down my spine,” Ayers Alliance chief investment officer Jonathan Barratt.
The turmoil in Iraq sent Brent to a nine-month high of $115.71 per barrel in June, but prices have fallen since, with no disruptions to global oil supply and Libyan output even rising.
New tensions in the Middle East are cropping up, however. Turkey’s parliament authorised the government on Thursday to order military action against Islamic State as the insurgents tightened their grip on a Syrian border town, sending thousands more Kurdish refugees into Turkey.
Brent for November delivery was up $0.36 at $93.78 per barrel by Friday morning. But the contract is down more than $3 for the week, having hit $91.55 on Thursday, its lowest since June 2012.
US November crude added $0.39 to $91.40 per barrel. It has lost more than $2 this week, its steepest weekly fall in a month. It dropped to as low as $88.18 in the previous session, its lowest point since April 2013.
Some investors may be betting on a softer US jobs number for September that could sap the dollar’s strength and boost commodities, such as oil, CMC Markets chief market analyst Ric Spooner told Reuters.
“We might be seeing some positioning or buying as a defence against the risk of the nonfarm payrolls being skewed to the downside,” said Spooner. A weaker greenback makes dollar-priced commodities cheaper for buyers using other currencies.
But economists polled by Reuters forecast that US nonfarm payrolls likely rose by 215,000 last month against 142,000 in August.
Some analysts say only a cut in output by the OPEC may rescue oil prices as expectations rise that they would agree to do so at their meeting next month in Vienna.
While some OPEC countries are calling for supply cuts, however, other core members are betting winter demand will revive the market, suggesting the group is no closer to any collective steps.
“I think once we get down to $85-$90 for Brent one would imagine that OPEC would be beginning to talk about tightening supply,” Spooner said.