SINGAPORE – Brent crude eased for a fourth consecutive session yesterday, but held above $100 a barrel after dropping below that level on the previous day for the first time in 16 months, with prices supported by the hope of production cuts by Organisation of Petroleum Exporting Countries (Opec).
Continued output from strife-torn countries such as Iraq and Libya and the shale oil boom in the United States had lessened supply side risks, while slowing growth in western economies and China had raised demand concern, Astmax commodity fund manager Tetsu Emori said.
“Oil at below a $100 a barrel is a little bit risky in the current market — $100 a barrel is really a central point for oil countries,” Emori said.
Brent was trading 14c lower at $100,06 as of 3.30am after ending the previous session 62c down. It had earlier on Monday slumped to $99,36, the lowest since May 1 2013, before rebounding into three-digit territory.
US crude was 28c higher at $92,94 after falling 63c on Monday when it dropped for the third consecutive
But there was potential for Brent to trade at about $120 a barrel by the end of this year, while US crude could hover around $110 to $115 a barrel as a result of rising winter demand and possible geopolitical concern, Emori said.
The expectation of production cuts by Opec comes as Gulf Arab oil ministers gather on Thursday in Kuwait for an annual meeting that could include discussion about price levels.
Top Opec exporter Saudi Arabia and other Opec countries favour oil at $100 a barrel and prices are under pressure due ample supply even as some Opec delegates saw the lower prices as short-lived.
US oil prices were also supported by a forecast decline in US commercial crude oil and petrol inventories last week, which raised the hope of improving seasonal demand.
Crude oil stocks fell by 1,5 million barrels in the week to September 5, according to a preliminary Reuters analysts’ survey on Monday.
The poll was released ahead of weekly inventory reports from industry group the American Petroleum Institute yesterday and from the US Department of Energy’s Energy Information Administration.
Investors were also eyeing developments in the Middle East.
Iraq’s parliament approved a new government headed by Prime Minister Haider al-Abadi on Monday in a move to save Iraq from collapse and in what US Secretary of State John Kerry said was a “major milestone”.
Libya’s oil output had risen to 740 000 barrels a day, the National Oil Corp said on Monday, an increase from 725 000 barrels a day that has been fuelled by the reopening of several oil export ports.