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Brent Falls Below $90 to Near 4-Year Low

Brent Falls Below $90 to Near 4-Year LowBrent Falls Below $90 to Near 4-Year Low

Brent crude futures fell below $90 a barrel on Friday, close to a four-year low, as rising supply and more grim economic news stretched a months-long slump in oil prices.

US crude also slumped nearly $2 to hit its lowest since 2012, but expectations that OPEC would intervene by reducing its production have been thrown into doubt as its members appeared to be locked in a price war.

Brent crude for November delivery was down 60 cents at $89.45 a barrel, after falling earlier to $88.11 on Friday - its lowest since December 2010, according to Reuters.

Brent has fallen nearly 24 percent since hitting this year's high of $115.71 in June, and is in line for a third straight week of losses, as growing supply from Libya and the United States has met softer economic data from Europe and Asia.

Concern about a recession in Germany was compounded early on Friday as two sources in the ruling coalition said Europe's largest economy would cut its growth forecasts for 2014 and 2015 next week. The news followed data earlier this week that showed exports in Europe's largest economy fell in August by the most since January 2009.

China, the world's second-largest oil consumer, is also seeing signs of a slowdown. Data due next week is forecast to show that softer domestic demand probably slowed growth in China's imports, investment and retail sales to multi-month or multi-year lows in September.

The bearish developments have increased pressure on members of the Organization of the Petroleum Exporting Countries (OPEC) to take action to cut supply, which analysts said is unlikely before its Nov. 27. But some OPEC members have shown reluctance to share in any reductions or lose market share to other countries.

"They're all fighting for market share through the official selling prices," said Olivier Jakob, managing director of PetroMatrix. "They're really not showing any signs, and Saudi Arabia has not shown any signs, that they will cut production."

The main reference price for OPEC crude oil exports fell to its lowest since 2010 on Thursday, tracking the slump in global oil benchmarks.

The relentless decline in oil prices prompted investment bank Barclays to slash its average fourth-quarter forecast for Brent to $93 a barrel from $106 previously.

 “Fluctuations that we are witnessing in prices are not called price-reduction wars,” Shana news agency quoted Iranian Oil Minister Bijan Namdar Zanganeh as saying on Oct. 7.

Financialtribune.com