Oil slumps to 14-month low in poor start to week
Oil prices dived to a 14-month low on Monday, spurred by worries over soft global crude demand, abundant supplies and easing concerns about conflicts in Ukraine and Iraq, dealers said.
Brent North Sea crude for October sank as low as $101.16 per barrel, reaching a level last seen on June 26, 2013. It later stood at $101.23, down $2.30 from Friday's closing level.
Also on Monday, US benchmark West Texas Intermediate (WTI) for delivery in September tumbled $1.39 to $95.96 a barrel.
"Crude oil was having another day of heavy losses after a slight respite from recent declines on Friday," said CMC Markets analyst Jasper Lawler.
"With geopolitical tensions failing to have any material impact on production, oil prices are now falling through the floor as a fragile global recovery is not providing enough demand to match the increase in supply."
The oil market had jumped late on Friday after Kiev said that Ukrainian forces had destroyed part of a Russian military convoy that entered its territory.
"It became apparent on Friday just how nervously the market reacts to geopolitical risks: reports of the alleged destruction of an armed Russian convoy by Ukrainian troops on Ukrainian territory pushed Brent up by one US dollar," said Commerzbank analyst Carsten Fritsch.
"Over the weekend, the reports turned out to be false, and Brent has shed most of these gains at the start of the week, now trading at well below $103 a barrel again."
News of the shelling had sent stock markets tumbling and pushed up oil prices on Friday as investors feared direct conflict could break out between Ukraine and Russia, the world's second-largest crude producer.
But European equities rebounded sharply on Monday as traders breathed a sigh of relief over easing tensions in east Ukraine and gains by Western-backed forces in Iraq.
Russia said Monday that "certain progress" was made at Ukraine crisis talks in Berlin between the two countries' foreign ministers and their counterparts from Germany and France.
Investors fear a full-blown military conflict between the two neighbours will disrupt Russian energy exports to Europe, particularly as Ukraine is a major conduit for Russian gas.
Elsewhere, traders eyed easing market concerns over ongoing unrest in key OPEC crude producer Iraq.
Kurdish officials said their fighters, backed by US warplanes, have retaken the country's largest dam from jihadists, as the United States and Britain step up their military involvement.
The recapture of Mosul dam marks the biggest prize yet clawed back from Islamic State (IS) jihadists since they launched a major offensive in northern Iraq in early June, sweeping Iraqi security forces aside.
IS militants, who have declared a "caliphate" straddling vast areas of Iraq and Syria, also came under air attack in their Syrian stronghold of Raqa on Sunday, a monitoring group said.
© 2014 AFP