Brent Under Pressure From Subdued Global Demand
Brent crude oil traded steadily below $102 on Thursday morning as investors continued to worry about oversupply rather than focusing on instability across the globe. The commodity traded at $101.64 at 8:50 GMT following the release of disappointing data from both the eurozone and China.
China And Europe Slowing
PMI figures out on Thursday showed that factory activity in China was at a three month low in August, suggesting that the world’s second largest consumer was heading for another slowdown. Data from China has been disappointing this year as the nation struggles to continue supporting growth.
Meanwhile, factory activity in Europe also fell short of expectations with a 52.8 composite flash PMI reading. The figure, although above the 50 point mark that separates expansion and contraction, showed a sizable drop from July’s 53.8 reading.
Related Link: Supply Glut Continues To Weigh On Brent Prices
Shaky global demand coupled with an oversupplied market has taken Brent prices to near 14 month lows recently, creating worry among investors that OPEC could step in and cut production. As the price of crude gets closer to $100, the nations that make up OPEC are likely getting nervous as most require the price to remain above $100 per barrel in order to maintain their budgets.
However, CNBC reported that the group has said they are not worried about the commodity’s recent drop in price and that they are not planning to cut output anytime soon. Instead, the group said seasonal demand will likely increase as autumn approaches, which will help support prices.
Moving forward, investors will be watching for any developments in the ongoing conflicts in Eastern Europe, Africa and the Middle East, though most don’t see any new supply interruption risks materializing.
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