Brent crude fell below $100 a barrel for the first time since June 2013, as a slowdown in imports into China reinforced signs that global markets are comfortably supplied. West Texas Intermediate dropped to the lowest in almost eight months.
The global benchmark slipped as much as $1.06, or 1.1%, in London to $99.76 a barrel in London. The last time it traded below $100 was June 24, 2013. China’s purchases declined 2.4% in August, compared with a 1.6% drop in July, data from the Beijing-based customs administration show. Chinese exports rose by 9.4%.
Oil markets in the US and Europe face a glut amid constrained consumption and the recovery of supplies from Libya, according to the International Energy Agency. Growth in China, the world’s second-biggest oil consumer, will drop to 7.4% this year, the weakest pace since 1990, according to economist estimates compiled by Bloomberg. It will slide to 7.2% next year.
“Demand fears will take some time to dissipate,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by e- mail. “China’s slowing imports this morning did not help lift these concerns. The Atlantic basin supply glut is still in place.”
Brent for October settlement traded 85 cents lower at $99.97 a barrel on the London-based ICE Futures Europe exchange at 10.27 am local time. The European benchmark crude was at a premium of $7.37 to WTI. It closed at $7.53 on Sept. 5.
WTI for October delivery lost as much as 92 cents, or 1%, to $92.37 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Jan. 14.
In China, imports fell for a second month as a property slump hurt domestic demand. The trade surplus climbed to a record of $49.8 billion in August as exports rose on the back of increased shipments to the US and Europe.
The 2.4% drop in imports compares with an estimate for a 3% increase. Exports increased 9.4% from a year earlier, the Beijing-based customs administration said today, compared with the 9% median estimate in a Bloomberg survey.
Money managers reduced net-long positions in West Texas Intermediate futures in the seven days to Sept. 2, data from the US Commodity Futures Trading Commission showed.
Libya, holder of Africa’s biggest crude reserves, is pumping 720,000 barrels a day, National Oil Corp. spokesman Mohamed Elharari said by phone from Tripoli yesterday. That compares with a monthly average of 400,000 a day in July.
Brent’s decline below $100 will probably trigger further losses because prices are currently more sensitive to bearish news reports and disregard threats to supply across the Middle East and North Africa, according to Commerzbank AG.
“The market appears at present to be deaf in one ear,” Carsten Fritsch, a Frankfurt-based analyst at the bank, said in a report. “The price slide is also speculatively driven to a major extent. We see little justification for the massive increase in pessimism in view of the many geopolitical risks to the supply of oil.”