TOKYO, Sept 29: Brent crude oil fell below $97 a barrel in Asian trade on Monday, moving closer to a two-year low hit last week due to weak data from major buyer China and a stronger U.S. dollar.
The London benchmark has fallen from $115 in June as geopolitical tension in the Middle East has failed to derail petroleum output and concerns about slow demand have grown. Brent for November delivery had fallen 27 cents to $96.73 a barrel by 0446 GMT. Front-month prices fell to an intra-day low of $95.60 on Sept. 24, the lowest since July 2012.
U.S. crude dropped 58 cents to $92.96 a barrel after jumping just over $1 on Friday on the back of strong U.S. economic data.
‘The Chinese data over the weekend was bearish for demand and the WTI jump on Friday led to profit-taking today,’ said Ken Hasegawa, a commodity sales manager at Newedge Japan. Chinese industrial profits fell 0.6 percent in August from a year earlier, reversing from July’s 13.5 percent rise, the government said on Saturday, adding to problems such as unsteady exports, a housing downturn and cooling investment growth in the world’s No.2 economy. But with growth in China’s manufacturing sector looking to have steadied in September as factory orders held up, according to a Reuters poll, investors fearing that the Chinese economy is quickly losing steam may get some welcome relief.
The dollar hit a four-year peak against a basket of currencies on Monday and that also weighed on petroleum since it makes products priced in the greenback expensive for buyers using other currencies.
The firmer dollar hit other commodities, too, with spot gold dropping towards a nine-month low and copper futures falling to three-month lows.
To help stem the decline in oil, Iran has urged OPEC members to make coordinated efforts, but that has highlighted a split with other members of the oil producer group such as Saudi Arabia who are playing down the price drop.
Over the weekend, air raids believed to have been carried out by U.S.-led forces hit three makeshift oil refineries in northern Syria as part of a campaign against Islamic State, a human rights group said.
‘(Middle East) supply disruption hasn’t happened (so investors) have no reason to hold long positions and they are liquidating positions to take profits … and the benchmarks are now down further below $100,’ said Tetsu Emori, commodity fund manager at Japan’s Astmax Investment. Providing some support, a strike has trimmed Libya’s oil output by 25,000 barrels a day to 900,000 bpd, a spokesman for state-run National Oil Corp (NOC) said on Sunday, but production is still up from a low of 200,000 bpd earlier in the year.
(AGENCIES)
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