Brent slips below $115 but eyes fourth weekly gain
August 24, 2012 5:55 PM EST
(Reuters) - Brent crude futures fell below $115 per barrel in Asia on Friday on signs of economic weakness across the globe, with doubts about more easing by the U.S. Federal Reserve and renewed worries over Europe's debt crisis sapping confidence in the outlook for demand.
Prices are still heading for a fourth straight weekly gain, thanks to a supply crunch following sanctions on Iran and maintenance-linked production cuts in the North Sea, while tropical storms in the Atlantic are also being watched closely.
"It's no secret that the global economy is in bad shape," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
"Europe's a mess, the U.S. is struggling and China, which was seen as a growth engine, is also sputtering -- all of which points to weak demand for crude."
Brent October futures were down 46 cents at $114.55 by 0607 GMT, with the contract up 0.7 percent in a week of wide swings.
U.S. crude eased 61 cents to $95.66 a barrel, dropping 0.4 percent on the week in its first such decline in almost a month. It is close to the support level of $95.61, a break below which would pull it down to $93.95.
Investors are also closely monitoring two tropical storms in the Atlantic, which potentially threaten U.S. energy interests in the Gulf of Mexico and their progress over the weekend will be key, analysts say.
Factory output data released on Thursday pointed to a deepening malaise in the world economy, dragging down stocks.
Growth in the United States remained sluggish, while an unexpected rise in its jobless claims last week spooked investors.
Crude oil, which rose more than a dollar in Asia on Thursday on hopes of more easing, gave up almost all its gains on mixed signals from top Fed officials.
St. Louis Federal Reserve President James Bullard told CNBC television the U.S. economic outlook had brightened since the July 31-Aug 1 meeting, whose minutes had triggered hopes of another round of monetary easing.
A few hours later, Chicago Fed President Charles Evans told the television channel there were a lot of reasons to do more.
He cited high unemployment and growth in the United States that he expected to be just 2 percent or 2.5 percent "if we are lucky" over the next year and a half.
While economic problems have been keeping prices subdued, there have been spikes at times of heightened tension in the Middle East.
"Some of the key downside risks - including European sovereign debt and growth concerns - remain high, while Iranian geopolitical risks also remain firmly in play," Jason Schenker, president of Prestige Economics, wrote in a report.
Iran has threatened to block the key Strait of Hormuz waterway through which about 17 million barrels a day sailed in 2011 as U.S. and European sanctions aimed at starving Tehran of funds for its nuclear programme have tightened.
To counter any threat from Iran, the U.S. Navy is cutting short home leave for the crew of one of its aircraft carriers and sending them back to the Middle East next week, according to the official Navy News Service.
"Iran supplies appear to have passed the lowest point, August numbers may be better than July, but the fact is that there hasn't been any progress in resolving the issue," Nunan said, and that will continue to be a factor of concern.
Asia's crude imports from Iran are set to recover in September to levels reached before a July 1 insurance ban by the European Union plunged trade with the Islamic Republic into uncertainty not seen in decades.
(With additional reporting by Wang Tao in Singapore; Editing by Clarence Fernandez and Joseph Radford)
Most Popular Slideshows
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- Kendall Jenner Could Be Next Victoria's Secret Angel [PHOTOS]
- Pope Francis: World War III Has Started On Piecemeal
- Champions League Results: Barcelona Barely Escapes With A Win, Chelsea Fails To Hold On To The Lead [PHOTOS]
Join the Conversation
- Google Nexus 6 Release Date on Q4 2014 Confirmed by T-Mobile Featuring Wi-Fi Calling
- 2 Reasons Nexus 6 Release Date is Worth the Wait: Android L Data Encryption & Material Design
- Samsung Galaxy Note 4 vs. BlackBerry Passport — Specifications, Features, Release Date And Price Showdown
- 3 Signs Apple iPhone 6 Could be in Short Supply Following its Sept 19 Release Date
- Australia Actively Rallying Support For International Coalition Against ISIS
- iOS 8 Jailbreak Release Update: Pangu Devs Will Outrace Evad3rs in Rollout of iPhone 6, iPad Unlocker
- Micromax Canvas A1 Vs Spice Dream Uno Vs Karbonn Sparkle V: A Choice On Which Android Is The Best