London: Brent crude fell on Friday, on track for a fall of around 10 percent this month and its worst quarter in five, and analysts saw little scope for a recovery in the run up to the end of the year.
ICE Brent for November settlement fell 17 cents, or 0.2%, to $103.78 a barrel by 1007 GMT. US crude was up 8 cents at $82.22.
Brent is poised for a monthly drop of 9.7%, the biggest since May 2010. It is down 7.4% this quarter, its worst performance since the third quarter of 2010.
The factors pressuring crude prices are unlikely to go away any time soon, analysts said.
“Demand is very poor in the Atlantic basin, prices are high, unemployment is high so we’d need to get greater confidence and a change in the employment picture to get a strong rebound,” said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
US oil demand in July was much weaker than expected, posting its biggest decline in nearly two years, the Energy Information Administration said on Thursday.
Signs of weakness from China the world’s second largest economy were also keeping investors nervous.
China’s manufacturing sector contracted for a third consecutive month in September, a factor which alongside lingering doubts about Europe’s ability to solve its debt crisis, helped to pressure riskier assets like equities.
Supply disruptions in the North Sea and the fact that Libya’s output was stopped by the war have helped keep a floor under prices, but analysts said these dynamics are likely to shift.
“Libya production is resuming fast, with ENI, Agoco, Total already restarting fields and Buzzard appears back to normal and Azerbaijan should remain close to current levels, and better supply will be confronted with very weak demand,” Christophe Barret, analyst at Credit Lyonnaise Corporate and Investment Bank said.
Supply from all 12 members of the Organization of the Petroleum Exporting Countries is forecast to average 30.25 million barrels a day this month, up from 30.15 million in August, a Reuters survey of sources at oil companies, OPEC officials and analysts found.
Libya’s output, which fell to almost nothing due to the civil war, has begun to recover, the survey found. It exported one small crude cargo on 25 September and, sources say, is sending some oil to refineries.
“If the current positive reports from Libya are confirmed then domestic production could reach 1.3 million barrels per day by the end of next year,” JP Morgan said in a note.
“On an annual average, this would lead to exports of around 0.6 mbd of light sweet crude, which together with rising Iraqi and non-OPEC output could lift supply by around 1.9 million bpd above today’s levels.”
However not all the political and economic news this week has been negative. US weekly jobless benefits claims fell to a five-month low while revised data showed second-quarter GDP grew slightly more than expected.
Germany’s parliament on Thursday overwhelmingly approved a plan agreed in July to expand the euro zone’s bailout fund.
Brent is expected to fall back to the previous trading session’s low of $102.35 as indicated by its wave pattern and a Fibonacci retracement analysis, according to Reuters market analyst Wang Tao.