Brent crude hits new low

6th October 2014, Comments 0 comments

Brent crude oil hit a new 28-month low point on Monday against a backdrop of weak demand growth and solid supplies.

In afternoon London deals, Brent North Sea crude for delivery in November dropped to $91.25 a barrel -- the lowest point since June 2012.

It went on to trade at $91.61 a barrel, down 70 cents compared with Friday's close.

US benchmark West Texas Intermediate (WTI) for November was down 27 cents at $89.47 a barrel in Monday deals.

WTI had last week fallen to $88.18 a barrel, a level last recorded in April 2013.

"Oil prices are likely to keep falling for the rest of the year as global supply is outstripping demand", said Tony Nunan, oil market analyst at Mitsubishi Corp.

"Supply of US shale gas alone can cover global demand this year, and unless OPEC countries reduce their production, or unless a fresh geopolitical concern occurs, the best estimate now is a bearish market," he added.

While output has surged in the United States owing to oil extracted from shale rock, exports are on the rise in Russia, Libya and Kurdistan.

Saudi Arabia meanwhile cut prices for the fourth straight month last week to defend its market share, suggesting it is unlikely to cut production any time soon.

Both Brent and New York contracts have shed about 15 percent in the past three months.

Also depressing prices is the stronger dollar, which surged on Friday after the Labor Department said the US economy created 248,000 jobs in September and the jobless rate dipped to a six-year low of 5.9 percent.

A stronger US unit makes dollar-priced commodities more expensive for buyers using weaker currencies, denting demand.

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© 2014 AFP

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