iNVEZZ.com, Monday, September 23rd: The Brent crude oil price has lost ground today with higher output from Iraq and easing concerns over the crisis in Syria offsetting upbeat economic data from China. West Texas Intermediate (WTI) has also declined.
Easing Syria concerns depress Brent crude oil price
The Brent oil spot price had shed 60 cents to $108.62 a barrel as of 13:50 BST. As Reuters reported, the oil price plunged last week following the return of some supplies from Libya after weeks of labour unrest and with fears of a US-led military action against Syria fading. In addition, Iraq said today that it had increased output from its southern oilfields following repairs to a key pipeline.
Bloomberg quoted Michael Hewson, a market analyst at CMC Markets Plc, as explaining that there were “no real drivers to oil this week and certainly the upside should remain fairly limited”. “The European data was mixed and the oil price looks too high due to a Syria premium, which is starting to melt away,” he added. The Markit Flash Composite Purchasing Managers’ Index (PMI) today showed that business activity in the Eurozone has grown faster than expected this month. The Flash Eurozone Manufacturing PMI, however, slipped to 51.1 in September from 51.4 in August.
Hewson also forecast that the Brent crude oil price would drop to $106 a barrel by the end of the week. The oil spot price rose to a two-year high on August 28 amid concerns that a US-led military action would exacerbate the Syrian conflict and lead to disruption of crude shipments from the Middle East.
More oil coming from South Sudan has also put pressure on the oil price today, with output raised to the highest level since the resumption of exports through Sudan. Reuters quoted Commerzbank senior oil analyst Carsten Fritsch as observing that the return of Libyan and South Sudanese supply to the market has been weighing down on prices.
“South Sudan is currently producing 240,000 barrels of crude oil per day, the highest volume since oil production was shut down in January 2012,” Fritsch pointed out.
As of 14:16 BST, WTI futures for delivery in November were 0.86 percent lower at $103.85 per barrel. The October contract, which expired on Friday, closed at $104.67 per barrel, the lowest settlement price since August 21.
The WTI was also under pressure on account of easing supply concerns which countered today’s positive data from China, where a manufacturing index rose to a six-month high. The preliminary September reading of 51.2 for China’s PMI, released today by HSBC Holdings Plc and Markit Economics, surpassed the 50.9 estimate of economists polled by Bloomberg.