Oil rout deepens as Libya, economic data feed oversupply worries reuters/article/2014/07/15/markets-oil-idUSL4N0PQ1BQ20140715 NEW YORK, July 15 (Reuters) - Oil prices dropped by as much as $2 on Tuesday, deepening their biggest slide this year as rising Libyan supplies and downbeat economic data sharpened concerns the global market was heading into a near-term glut. World oil prices have rapidly erased a geopolitical risk premium that had been pushing prices up since April, and selling has accelerated in recent days as traders shift their focus from violence in Iraq and Libya to weak global fundamentals. Heavy liquidation in the Brent market appeared to ease by midday with prices rebounding from session lows of under $105 a barrel. The rebound continued in after-hours trade following American Petroleum Institute data that showed U.S. crude oil stocks fell nearly 5 million barrels last week.[ID: nL2N0PQ22U] Still, dealers remained on edge after prices tumbled by nearly 6 percent in just weeks, with fears over the militant uprising in Iraq quickly being set aside by big hedge funds who have hastily pared back record bullish long positions. Despite ongoing fighting between militias in Tripoli, Libyas oil output has risen to 588,000 barrels per day (bpd), an increase of around 25 percent since the weekend, the acting oil minister told Reuters. Brent futures lost 96 cents to settle at $106.02 a barrel, recovering from a low of $104.39 a barrel earlier in the session, the weakest point since April 2. The selloff is expected to continued this week as investors liquidate ahead of Wednesdays futures contract expiry. U.S. crude futures lost 95 cents to settle at $99.96 a barrel. It had slipped to a low of $99.01 a barrel earlier in the session, breaking the 200-day moving average of $99.92, a key technical indicator closely watched by traders. The spread between the two benchmarks closed at $6.06. The breakdown in prices has been concentrated in prompt Brent futures, with the first-month contract falling to its biggest discount versus second-month in four years, a structure known as contango that typically signals a surplus of immediately available crude. August/September ICE Brent has fallen from parity to more than $1.10 a barrel, a dramatic slump in a spread that rarely turned negative over the past few years. Despite rising supplies from Libya, concerns mounted after militia clashes in Tripoli closed the countrys main airport, prompting the United Nations to evacuate its staff. Traders were also eyeing the situation in Iraq, where politicians named a moderate Sunni Islamist as speaker of parliament on Tuesday, a first step toward a power-sharing government that could put an end to the Islamist insurgency that drove oil prices to nine-month highs in June. As global oil supply remains solid, the oil markets are coming under pressure from weaker-than-expected economic data from some of the worlds largest economies. In China, lower global refining activity and weaker buying have decreased demand for crude oil, London-based consultancy Energy Aspects said in a note. Investors are awaiting June economic growth figures, due on Wednesday, to understand whether the worlds top net oil importer needs further stimulus support. In Europe, German investor confidence dropped in July for a seventh straight month to its lowest level since December 2012, a leading survey showed.
Posted on: Wed, 16 Jul 2014 12:29:09 +0000