Brent falls back below $98 on sluggish demand, ample supply
By Seng Li Peng SINGAPORE (Reuters) - Brent crude fell below $98 a barrel on Monday, down for the third session in four, as sluggish demand and ample supplies outweighed a possible cut in oil output from the Organization of the Petroleum Exporting Countries (OPEC). Comments from OPEC's secretary general last week that the group could cut output next year buoyed Brent on Friday, but investors' attention turned back to the gloomy economic outlook in Europe and China which has curbed oil demand. A cut in Libya's oil production also had limited impact on prices. November Brent was trading 48 cents lower at $97.91 a barrel by 0456 GMT after posting its first weekly rise in three last week. U.S. crude for October delivery fell 40 cents to $92.01 a barrel, ahead of the expiry of the contract at the end of Monday. "When you look at the increase in supplies in the past year, you see very strong growth in the United States in particular from non-conventional sources and also in other non-OPEC producing areas ... supply growth is not being driven by OPEC," said Phin Ziebell, economist at the National Australia Bank (NAB). OPEC members, some of whom require oil prices at above $100 to meet budgetary needs, will review the organization's oil output policy at its next meeting on Nov. 27. Oil production in Libya on the other hand had fallen to 700,000 barrels per day, down nearly 20 percent from 870,000 bpd a week ago as its El Sharara oilfeld and Zawiya refinery are still closed, said a spokesman for the state-run National Oil Corp (NOC) on Sunday. But concerns over an extended stagnation in Europe that could pull the other economies down was highlighted at the G20 meeting in Australia on Sunday. "We expect weak global demand for crude oil to have already been priced in based on the drop in prices we have seen in the past few months. We believe it is very unlikely that prices would increase," Phillip Futures said in a note dated Sept. 22. Investors will look for cues on where demand from China, the world's second-largest economy, is heading from its flash manufacturing PMI reading due out on Tuesday. Earlier, the world's top energy consumer had reported that this month marked the slowest factory output growth in nearly six years, partly causing Brent to slump under $97, the lowest in more than two years. "The overall story is of abundant supply and very slack demand being coupled with an increasing lack of nervousness about geopolitical tensions in the Middle East and the Ukraine," Ziebell of NAB said. In signs that western sanctions could impact Russian oil and gas production in the long run, Exxon Mobil said on Friday it would wind down drilling in Russia's Arctic in the face of U.S. sanctions targeting Western cooperation with Moscow's oil sector. French jets struck a suspected Islamic State target in Iraq for the first time on Friday, expanding a U.S.-led military campaign against militants who have seized a third of the country and also control large parts of neighbouring Syria. Fighting has also intensified in southern Libya as soldiers and police clashed in the last few days near the country's biggest oilfield El Sharara. The field was shut last week because of damage to a storage facility at the Zawiya refinery in the north, which it feeds.
