Comments from OPEC’s secretary general last week that the group could cut output next year buoyed Brent, but investors’ attention turned back to the gloomy economic outlook in Europe and China, which has curbed oil demand.
A cut in Libya’s oil output had limited impact on prices.
November Brent was 59 cents lower at $97.80 a barrel by 1100 GMT. US crude futures for October fell 7 cents to $92.34 a barrel, ahead of the contract’s expiry at the end of Monday.
“Sentiment remains predominantly bearish given downbeat demand growth expectations and plentiful supplies,” said Andrey Kryuchenkov, London-based oil and commodities strategist at Russian bank VTB Capital.
“However, I think the downside is limited,” he added. “The market is very sensitive to supply jitters, given that the risk premium is gone and judging by the reaction last week to a fresh outage in Libya and OPEC comments.”
OPEC members, many 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.
Oil production in Libya has fallen to 700,000 barrels per day, down nearly 20% from 870,000 bpd a week ago as its El Sharara oilfield and Zawiya refinery stay closed, a spokesman for the state-run National Oil Corporation said on Sunday.
Fighting has 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.
But concerns over extended stagnation in Europe, that could pull down other economies, were highlighted at the G20 meeting in Australia on Sunday.
“We expect weak global demand for crude oil to have already been priced in, based on the drop in prices we have seen in the past few months. We believe it is very unlikely that prices would increase,” Phillip Futures said in a note to clients.
Investors will look for clues on where demand from China, the world’s second-largest economy, is heading from its flash manufacturing PMI reading due out on Tuesday.
In signs Western sanctions could affect Russian oil and gas production in the long run, ExxonMobil said on Friday it would wind down drilling in Russia’s Arctic.