Singapore — Brent crude dropped toward $108 a barrel yesterday as the recent surge in prices gave some investors a chance to sell their holdings for profit, while more data was eyed for clues on the health of the global economy and the outlook for oil demand.
Oil prices jumped on Friday on better United States jobs data and talk of stimulus measures by the eurozone to support growth. Supply disruptions in the North Sea and the Middle East also aided prices although Sudanese crude exports could resume soon, as Sudan and South Sudan reached a deal on oil transit fees.
Brent crude fell 31 cents to $108,63 a barrel by 0509GMT after jumping nearly 3% on Friday. US crude edged down 12 cents to $91,28 after surging close to 5% in the previous session.
“Prices did rise quite a lot, so it’s probably profit-taking going on,” said Michael Creed, an economist at the National Australia Bank. US employers hired the most workers in five months in July, but an increase in the jobless rate to 8,3% kept prospects of further monetary stimulus from the Federal Reserve on the table.
Expectations for more stimulus measures from the eurozone to support the debt-laden region and the latest pledge by China, the world’s top energy consumer, to step up monetary policy fine-tuning, were also helping to keep a floor under oil prices.
“There is a greater degree of optimism in commodities surrounding the eurozone than 2-3 weeks ago,” Creed said.
“We are still awaiting details regarding what Draghi meant by he’ll do anything to maintain the euro.” Data due from China this week are likely to show the world’s second-largest economy is, at best, stabilising rather than recovering briskly.
On the supply side, a fall in North Sea output due to maintenance and lower exports from Iran on tight Western sanctions have shored up oil prices.
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Sudanese oil exports may resume soon as Sudan reached a deal with South Sudan on oil transit fees, a first step towards ending a dispute which had brought the hostile neighbours close to war. But Sudan also said it wanted a border security agreement before oil flows resumed.
Disputes between the countries have reduced Sudanese crude exports by about 350 000 barrels per day from early this year.
Investors are also watching the approach of tropical storm Ernesto which kept on a westerly course in the Caribbean Sea on Sunday and was expected to strengthen slowly over the next 48 hours.
