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Brent Below $97 As Demand Falters

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Brent Below $97 As Demand Falters
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Weak data from China coupled with expectations of a sooner than expected rate hike in the United States pressured Brent crude oil and took prices below $97 on Monday. The commodity traded at $96.91 at 10:45 GMT, near a two-year low.

Data out over the weekend showed that China’s factory output slowed to a six-year low, confirming speculation that the nation’s economy struggled in the third quarter. Factory production rose by just 6.9 percent annually in August, a far cry from the 8.8 percent rise that was expected and July's 9 percent increase.

The Chinese data had a major impact on Brent prices, as the country is the world’s second-largest consumer and is a large part of the global economy. Last week, the International Energy Agency lowered its forecast for oil demand growth in both 2014 and 2015, citing difficulties within the global economy and the inability of demand to keep up with rising supplies.

Related Link: Euro Treads Water At $1.29 Ahead Of Fed Meeting

CNBC reported that Libyan production is expected to continue rising over the next few months as the government slowly reopens and restarts its oilfields. Though the North African nation continues to deal with violence in and around the capital, analysts are expecting to see the nation’s output increase to one million barrels per day by October. If its exports live up to forecasts, the nation’s oil production will have nearly returned to full capacity after being depressed to less than half for months.

Moving forward, investors will be watching the United States for any clues from the Federal Reserve about a timeline for its interest rate hike. Though the bank has been cautious about the rate hike, saying it will maintain low interest rates well into 2015, many believe that an improvement in the labor market could mean a sooner than expected interest rate rise. If the bank does make any comments suggesting a rate hike at this week’s meeting, the dollar will likely rise, which in turn will further suppress Brent prices.

Posted-In: News Commodities Forex Global Markets Best of Benzinga

 

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