Renewed Demand Fears Weigh on Brent
Brent crude oil traded at 111.81 at 8:48 GMT on Monday morning. The commodity felt pressure of global economic worries as sluggish growth in Japan and uncertainty surrounding the US debt crisis drove the market. An assessment by the Organization of the Petroleum Exporting Countries last week caused investors to revisit old worries that future oil supply will overshadow demand. Even after Saudi Arabia cut its output and the International Energy Agency released a statement saying the market was tighter than expected, investors have proceeded with caution.
Data showing that US consumer sentiment hit a one year low in January did little to assuage demand woes. The number one oil consumer has shown signs of improvement in the New Year, but with Democrats and Republicans locked in a political battle over the nation's debt ceiling, many view the nation's future as uncertain.
However, prices remain underpinned by instability within the Middle East where a recent hostage crisis underscored fear that the region was unsafe and caused many to believe that the region's energy facilities have become targets.
Islamic militants attacked an Algerian gas field last week, which ended with the loss of 80 lives. According to Reuters, the horrific event has been one of the worst international hostage crises in years, and claimed the lives of American, British, French, Japanese, Norwegian and Romanian citizens.
Many are expecting ramped up security in the region's energy fields as they become targets for militant attacks. In Libya and Egypt, increased security became a top priority after Islamist militants made threats to attack in North Africa.
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