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Brent Starts The Month On A Low Note

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Brent Starts The Month On A Low Note

Brent crude oil started off the month on a low note after posting its largest monthly loss in four months on Friday.

The commodity traded at $106.35 at 6:00 GMT on Monday morning as worries about the sell offs in emerging markets and the US Federal Reserve's decision to continue tapering weighed on prices.

Instability in emerging markets spread to Europe on Friday and the region's stocks suffered their first monthly loss since August. Brent prices slipped as traders stepped back and looked to unwind their positions ahead of the weekend.

See also: #PreMarket Primer: Monday, February 3: Market Sentiment Slumps

Last week the US Federal Reserve elected to cut back a further $10 billion from its monthly asset buying scheme. The decision was backed by positive economic indicators which showed that the number one oil consuming nation's economy was recovering steadily and would be able to stand on its own without the central bank's monetary assistance. While a stronger US economy is positive for crude demand, the Fed's decision drove the dollar upward, thus sending oil prices lower.

CNBC reported that an increase in oil supply also weighed on Brent prices after data showed that OPEC's oil output rose in January. The rise was partially attributed to increased production from Libya, where exports have been depressed to nearly half of their normal capacity since the summer. Higher shipments from both Iraq and Iran also played into the organization's higher output.

Moving forward investors will be keeping an eye on the Middle East as tension in the region continues to simmer. Recent reports that Syria has not been keeping up its end of a deal to eliminate all of the nation's chemical weapons has caused many to worry whether the fragile balance in the oil rich region could soon be offset.

 

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Posted-In: Federal Reserve OPECNews Commodities Forex Global Pre-Market Outlook Markets Best of Benzinga

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