Brent Falls Below $109 On Waning Demand
Brent crude oil fell below $109 to finish the week as declining demand weighed on prices. The commodity traded at $108.73 at 7:45 GMT on Friday morning as investors interpreted EIA data as detrimental to Brent prices.
This winter, severe cold in both the US and Europe kept Brent prices supported as demand for heating oil increased. However, with the peak season coming to a close and weather around the globe improving, many expect demand to taper off. Also worrying was disappointing data from China which confirmed that the number two oil consumer's economic slowdown was set to continue and would likely depress the nation's oil appetite.
CNBC reported that Brent prices were also pressured by a report from the Energy Information Administration which detailed spare output capacity. Spare output capacity, a major factor in global crude prices, is the quantity of oil that producers can bring to the market without any major investments. The EIA reported that figure as nearly 100,000 barrels per day higher than it had been the past 60 days.
The prospect of Iranian oil being reintroduced into the market has also been a factor in keeping Brent prices lower. After Iranian officials agreed to cut down on Tehran's nuclear development activities in exchange for looser sanctions on oil exports in 2012, the nation's oil tanker fleet is preparing to ramp up production.
Recent ship tracking sources revealed that three Iranian oil tankers went to Asia to deliver crude after spending months at home ports storing unused oil. The news indicates that the relaxed sanctions are allowing the nation's exports to increase.
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