SINGAPORE — Brent crude futures steadied near $112 a barrel yesterday as investors weighed a weaker demand outlook amid a sluggish global economy against the continuing potential for supply risks. The global crude benchmark opened the fourth quarter lower on Monday as investors struggled to push prices higher in the face of poor manufacturing data out of Europe and China, and analysts expect further price weakness. “I see continued downward pressure for oil. Supply will continue to chase demand, given the weak economic fundamentals overall,” said Victor Shum, managing director for downstream energy consulting at IHS Purvin & Gertz. “Geopolitics is still the wild card and could provide support or even spikes for prices in coming months,” said Shum, citing sustained tension between major oil producer Iran and the West over Tehran’s disputed nuclear programme. Iran-linked supply disruption worries, along with efforts by major central banks to spur economic activity via increased liquidity, pushed up Brent prices by 15% over the third quarter, their best three-month showing in one and half years. Brent crude for November delivery was off 12 cents at $112,07 a barrel by 0421 GMT United States crude slipped 17 cents to $92,31.
Data on Monday showing that US factory activity expanded for the first time since May helped US oil futures close firmer.
While Federal Reserve Chairman Ben Bernanke was confident the US economy was not at risk of slipping into a recession, he said growth in the world’s largest oil consumer was too slow.
Although manufacturing activity in the US increased in September, it remained well off levels seen earlier this year.
“The pick-up is from a very low base, the key focus now in the US is getting unemployment down, and to make inroads, you’ll need at least 3% economic growth,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
The US economy grew at a rate of 1,3% in the second quarter and most analysts expect growth will remain sluggish. — Reuters
