Brent Crude Below $98/Barrel on Weak Demand
Singapore: Brent crude fell below $98 a barrel on Friday, heading for its worst week in six, as concerns over weak demand outweighed geopolitical worries in the Middle East and Ukraine.
Weaker oil demand in China and Europe had caused growth in global oil demand to soften at a remarkable pace, the International Energy Agency said in its monthly report released on Thursday.
The West's energy watchdog cut its demand growth projections by 150,000 barrels per day (bpd) to 900,000 bpd for 2014 and by 100,000 bpd to 1.2 million bpd in 2015.
Brent is down 3 per cent for the week so far, headed for its biggest weekly loss since the week to August 1. The October contract fell 28 cents to $97.80 by 0316 GMT after a 4-cent gain in the previous session snapped a 5-day losing streak.
US crude dipped 2 cents to $92.81 a barrel after closing up $1.16 on Thursday.
Brent bounced from a 2-year low on Thursday after Russia warned the U.S. that air strikes in Syria against Islamist militants would be an act of aggression without a U.N. security mandate. This raised the spectre of a new confrontation between Moscow and the West.
"I would like to see more risk premium priced in but the market doesn't want to," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
"There's still a lot of potential concerns, but the market seems relaxed by it all."
Geopolitical worries included Russia, which is facing fresh sanctions from the European Union and the U.S. over the Ukraine crisis, McCarthy said.
The EU will implement tougher sanctions against Russia later on Friday, although they could be removed if Moscow abides by a ceasefire between Kiev and pro-Russian separatists. However, Russia called the new measures anti-peace.
The United States will also release details later on Friday of its own new sanctions against Russia which are expected to target Sberbank, Russia's largest bank, and further limit Russian banks' access to U.S. capital.
Investors are waiting for industrial and retail sales data from China on Saturday to assess whether a recovery in the world's second largest economy is picking up steam.
The market is also keeping an eye on Iran which faces a "difficult road" to reach an agreement with six world powers over Tehran's nuclear programme by a late November deadline, a senior Iranian negotiator said on Thursday.
Copyright: Thomson Reuters 2014