TOKYO, Sept 10 (Reuters) – Brent crude oil edged up to hold above $99 a barrel on Wednesday but was not far off a 16-month low hit the day before because of worries about global oil demand.
Prices were supported by a larger-than-expected fall in U.S. crude inventories, although gains were capped by a firmer U.S. dollar, which makes commodities priced in the greenback more expensive for holders of other currencies. USD/
The dollar stood near a 14-month high against the euro hit on Tuesday, with some investors betting the Federal Reserve would raise interest rates earlier than previously thought.
Brent crude LCOc1 for October delivery was trading 19 cents higher at $99.35 a barrel at 0450 GMT, after falling to $99.03 on Tuesday, the lowest intraday price since May 1, 2013. U.S. crude CLc1 was up 5 cents at $92.80 a barrel.
“After falling below the $100 milestone, Brent potentially could go further lower to around $95,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research & Consulting.
“Even demand in the U.S., whose economy continues to expand, is not rising that much, and there are concerns of a further weakening in global demand.
CRUDE STOCKS FALL
Oil prices found support from Energy Information Administration (EIA) data showing a 1.9 million barrel decline in U.S. crude oil inventories last week, compared with analysts’ expectations for a fall of 1.1 million. U.S. gasoline stocks unexpectedly rose by 719,000 barrels, while distillate stocks gained by 1.7 million barrels. (Full Story)
“Crude inventories are not clearing and building up despite production in the North Sea,” said Kaname Gokon, general manager of research at brokerage Okato Shoji in Tokyo. “Demand will stay weak as long as the market returns to backwardation.”
Gulf Arab oil ministers hold their annual meeting on Thursday in Kuwait, which could include discussions about prices now Brent is below the $100 a barrel acceptable to OPEC.
“The price hovers really close to $100 and there seems to be no move (for OPEC) to support prices,” Akuta added.
Ukraine remained in focus.
The United States was putting the finishing touches to possible new sanctions on Russia’s defence, energy and financial sectors over its intervention in Ukraine, the U.S. State Department said on Tuesday. (Full Story)
European Union Trade Commissioner Karel De Gucht called on the United States to export oil and natural gas to Europe under a transatlantic trade deal, in part to reduce the region’s dependence on Russian energy resources. (Full Story)
The market was also paying attention to rising tension in South Sudan.
China has begun deploying 700 soldiers to a U.N. peacekeeping force in South Sudan to protect oil fields and Chinese workers amid a rebellion in the African country, the Wall Street Journal reported. (Full Story)