Oil Plunges below $105 on Oversupply, Weak Demand
Brent crude oil fell more than $1 to hit a two-week low on Friday, slipping below $105 a barrel in its third straight day of losses as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine.
Analysts say they expect global oil production to exceed demand this year, and a supply glut has already built up in the West African and European markets.
Worries over geopolitical risks to oil supply have eased despite escalating violence in parts of the Middle East and North Africa.
U.S. RBOB gasoline prices led the complex lower, falling by 1.7 percent during the session. U.S. gasoline stocks have climbed by more than 4.5 million barrels over four consecutive weeks of builds.
"Since June 23, the market's been going down," said Andy Lebow, vice president at Jefferies Bache in New York. "This looks like an extension of a pretty significant bear market."
Oil prices barely flinched after data showing U.S. job growth had slowed more than expected in July. Non-farm payrolls increased 209,000 last month, less than expected, after surging by 298,000 in June, the Labor Department said on Friday.
Brent crude fell to a low of $104.71, its weakest since July 15. It was down $1.16 at $104.86 a barrel by 1202 EDT (1602 GMT). Brent lost 5.6 percent in July, its biggest fall since April 2013.
U.S. crude futures fell 93 cents to $97.24 a barrel, following a 6.8 percent decline in July, the biggest monthly loss since May 2012.
An outage at the 115,000-barrel-per day Coffeyville, Kansas, refinery, a major crude consumer, could last up to four weeks, according to its operator.
The front of the Brent futures price curve is trading at a heavy discount to later barrels in a formation known as a contango. This discount has now lasted longer than any since early 2011, reflecting "weak physical demand and an oversupplied Atlantic Basin," Morgan Stanley (MS) analyst Adam Longson said.
Investors say they are less worried now than a month ago about the risk to oil supplies from conflicts and civil turmoil despite heavy fighting in many countries.
OPEC's second largest producer, Iraq, is battling an Islamic insurgency in the north and west. The conflict threatens to split the country, but has yet to have an impact on near-record oil exports from the south.
Baghdad is also embroiled in a dispute with Iraqi Kurdistan over oil exports via Turkey.
In Libya, oil output remains around 500,000 bpd, down from 1 million bpd in 2012, following weeks of clashes between rival militias.
Energy investments in Russia also faced delays after sanctions imposed by the United States and European Union limited access to funds.
(By Anna Louie Sussman; Additional reporting by Rowena Caine in London, Florence Tan in Singapore; Editing by Christopher Johnson and Lisa Von Ahn)
