SINGAPORE, Aug 7: Brent crude slipped below $108 per barrel on Wednesday, dropping for a fourth session and logging its longest losing streak since April, on easing supply worries and caution ahead of data from top oil consumers China and the United States.
Numbers from China due this week may show its exports, factory output and retail sales all edged up in July in initial signs of the economy stabilizing, while a U.S. government report on crude stockpiles later in the day will give investors an indication of the country’s demand outlook.
Brent crude fell 33 cents to $107.85 a barrel by 0517 GMT, while U.S. Oil slipped 6 cents to $105.24.
‘There is upcoming data from the United States and China that will give the market a sense of the demand outlook for oil,’ said Ric Spooner, chief market analyst at CMC Markets. ‘But the short-term outlook on oil prices looks to be on the downside.’
Any announcement from the U.S. Federal Reserve on rolling back its monetary stimulus would also impact oil, Spooner said. A pullback may boost the dollar, weighing on commodities such as oil that are priced in the currency.
Spooner expects $102.50 to be a key support for U.S. oil and around $109 a major resistance. For the European marker, the range is narrower, between $105.50 and around $109, he said.
Brent is poised to break a support at $107.40 and head towards $106.76, while U.S. Oil is expected to drop to $104.12, according to Reuters technical analyst Wang Tao.
Analysts at ANZ also expect oil, particularly the U.S. benchmark, to fall on weak technicals.
‘The WTI market is now looking a little weak on a technical basis as the market has traded lower lows and lower highs in the past two sessions,’ ANZ said in a note.
‘Nearby downside support is at $103 a barrel then $101.’
The market is now waiting for inventory data from the U.S. Energy Information Administration (EIA) for more trading cues.
Data from industry group the American Petroleum Institute showed U.S. Crude stocks fell 3.66 million barrels to 366.3 million last week as refinery output inched up. Analysts were expecting a 1.2 million draw.
OUTLOOK
Brent is also being pressured as risk premiums come off after Iran’s President Hassan Rouhani offered an olive branch to the United States in talks on Tehran’s disputed nuclear programme, raising hopes of progress after years of stalemate.
The comments are providing comfort to investors who have been on edge over worsening relations between the two. Geopolitical worries have kept Brent above $100 a barrel for most of 2012 and this year.
‘Such statements are usually for posturing and do not have any real impact at the end of the day,’ said Spooner. ‘But we have had a change of guard, and people are in a wait-and-see mode to see what comes out of it.’
Prices also fell on news of exports resuming from the Buzzard field in the North Sea, which form part of the underlying market for Brent futures.
(agencies)
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