Oil slips below $115, set for fourth weekly gain

Oil slips below $115, set for fourth weekly gain

London: Oil fell below $115 a barrel on Friday as signs of weakness in the global economy weighed on the demand outlook, although a host of supply-side concerns kept losses in check.

Crude was still heading for a fourth weekly gain because of lower exports from Iran, a drop in North Sea supply due to oilfield maintenance and the risk of weather-related disruption to Gulf of Mexico output.

Brent crude was down 38 cents at $114.63 a barrel by 1:08pm, up about 0.8% on the week. US crude eased 58 cents to $95.69.

“It’s no secret that the global economy is in bad shape," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

“Europe’s a mess, the US is struggling and China, which was seen as a growth engine, is also sputtering - all of which points to weak demand for crude."

European equities were lower in early trade on Friday, weighed by concern about the euro zone debt crisis. Reports on Thursday showed China’s factory sector contracted in August and a rise in new US jobless claims.

Fading expectations of strong monetary stimulus from the US Federal Reserve have also weighed on prices.

Iran and the fighting in Syria remain a focus for the market. Iran is holding talks on Friday with the UN nuclear watchdog about the Islamic state’s atomic activities.

Iranian oil exports have plunged due to Western sanctions over the country’s nuclear programme, and diplomatic sources said on Thursday Iran had installed many more uranium enrichment machines in an underground bunker.

Oil traders are also keeping an eye on two tropical storms in the Atlantic, Isaac and Joyce, for any risk they may threaten US energy supplies in the Gulf of Mexico.

Joyce has weakened to a depression, but analysts at Weather Insight, a Thomson Reuters company, gave Isaac a 50% chance of moving into the heart of the oil and gas producing region.

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