Oil traded close to a four-day low in New York amid concern that the global economy is weakening, threatening to curb demand for fuels.
Futures slid as much as 1.1 percent. Bank of Israel Governor Stanley Fischer said the world is “awfully close” to a recession, adding to concern raised at annual meetings of the International Monetary Fund last week. Hedge funds and other speculators trimmed bets that oil will rise, data from regulators showed on Oct. 12. Iran reiterated an offer to suspend domestic production of medium-enriched uranium before European officials meet to discuss tighter sanctions on the Persian Gulf country.
“The crude market is currently well supplied and prices will remain volatile before refinery demand picks up throughout the fourth quarter,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd., who predicts Brent crude will recover toward $125 a barrel by year-end.
Crude for November delivery fell as much as $1.04 to $90.82 a barrel in electronic trading on the New York Mercantile Exchange, its weakest level since Oct. 9, and was at $92.08 at 12:47 p.m. London time. Prices are down 6.8 percent this year.
Brent for November settlement on the London-based ICE Futures Europe exchange lost as much as 77 cents, or 0.7 percent, to $113.85 a barrel. The contract expires tomorrow. The more actively traded December future was up 46 cents at $114.07. The European benchmark was at a $23.20 premium to New York-traded West Texas Intermediate grade, up from $22.76 on Oct. 12.
The spread between Brent and WTI may be at a seasonal peak, according to Morgan Stanley. The gap may narrow as U.S. Gulf Coast refiners resume operations after maintenance, boosting demand for domestic crude, and as North Sea supplies rise after work finished on the oil fields that produce the grades underlying the Brent contract, Hussein Allidina, the head of commodities research at Morgan Stanley, said in a report dated today. The price difference reached $23.64 on Oct. 11, the most in almost a year.
Iran is ready to enter talks about its nuclear program in exchange for guaranteed supplies of 20 percent-enriched uranium for its Tehran Research Reactor, said Ramin Mehmanparast, a Foreign Ministry spokesman, according to a Press TV report yesterday. The European Union has reached a preliminary agreement to intensify sanctions to increase pressure on OPEC’s third-largest oil exporter to curb its nuclear program, EU diplomats with knowledge of the matter said on Oct. 12.
Officials from the EU’s 27 nations agreed in Brussels on Oct. 12 to close loopholes in sanctions aimed at curbing the Iranian government’s ability to raise funds for its atomic program, which the U.S. and its allies say may be aimed at producing weapons, the officials said, asking not to be identified because the talks were private.
The proposed sanctions must now be approved by the bloc’s foreign ministers, who meet today in Luxembourg.
“If the news coming out from Iran indicating that it’s willing to suspend 20 percent enrichment for reactor fuel is true and they reach an agreement, then we might see a push to the downside” for oil, Nabil Farhat, a partner at Al Fajer Securities, an Abu Dhabi-based broker, said yesterday.
Crude imports by China, the world’s second-biggest oil consumer, slid 1.8 percent in September from a year earlier to 20.08 million metric tons, according to data from the Beijing-based General Administration of Customs on Oct. 13. Purchases were up 9.1 percent from August, its website showed.
Money managers cut net-long positions in West Texas Intermediate oil by 5,168 futures and options combined, or 3.1 percent, to 161,004 in the week ended Oct. 9, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report on Oct. 12.
In London, hedge funds and other money managers raised bullish bets on Brent crude to the highest level in a month in the week ended Oct. 9, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 114,478 contracts, the London-based exchange said today in its weekly Commitment of Traders report. That’s an increase of 929 lots, or 0.8 percent, from 113,549 last week, and the highest level since Sept. 11.
Oil in New York has long-term technical support at $89.83 a barrel, data compiled by Bloomberg showed. On the weekly chart, that’s the 50 percent Fibonacci retracement of the decline to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Buy orders tend to be clustered near chart-support levels.