LONDON: Brent crude dropped to a two-year low below $97 a barrel yesterday, falling for a sixth straight session as mounting supply and weak demand outweighed speculation that conflicts in the Middle East could curb oil production.
North Sea crude oil hit a high above $115 in June as insurgents swept across northern Iraq, taking control of several oilfields, but prices have now fallen more than 15 percent from their highs as supply from other countries has increased much faster than demand.
Brent for October fell $1.32 to a low of $96.72 a barrel, its weakest since July 2012, before recovering slightly to trade around $97.10 by 1315 GMT. It closed $1.12 lower in the previous session.
US crude was down 85 cents at $90.82 a barrel.
VTB Capital oil strategist Andrey Kryuchenkov said oil prices had been undermined by a surplus of oil in the Atlantic Basin and an easing of tensions in Ukraine, which had raised concerns over the future of Russian oil supplies. “The Atlantic Basin supply glut is still weighing on sentiment, made worse by the uneasy truce in Ukraine,” Kryuchenkov said. “Demand concerns could take some time to dissipate.”
But world political worries remained in place.
Iraq is Opec’s second-biggest oil producer and exporter and investors are concerned about the potential impact on supplies, although Iraq’s oil industry has so far remained largely unaffected by the turmoil in the north of the country. Reuters
