Brent Prices Below $98 On Poor Economic Data

With all eyes on the Federal Reserve this week, oil prices remained soft on weaker global demand and rising supply. Brent crude oil traded at $97.52 at 10:45 GMT after falling to a 26 month low on Monday. The commodity has been under pressure recently as troubling economic data coupled with increasing supplies have weighed on prices.

Libyan oil production has been on the rise as the country regains control of its oilfields and ramps up their output. The nation’s exports have risen to nearly 1 million barrels per day, still shy of Libya’s maximum capacity, but a huge jump from earlier in the year when production was suppressed to less than half of normal capacity. 

Meanwhile data from around the globe suggests that demand will not be able to compensate for the growing supply. Factory output in China, the world’s second largest oil consumer, has fallen to a near six year low, while worries about the conflict in Ukraine continue to plague Europe. On Tuesday, Reuters reported that Germany’s ZEW survey of investor sentiment posted its ninth straight month of decline with a 6.9 reading in September. The figure showed a sizable drop from August’s 8.6 reading, but beat expectations of a 4.8 reading. The survey’s results largely reflect concerns about the growing tension between the West and Russia due to the conflict in Ukraine. 

Moving forward, investors will be looking to the US Federal Reserve as it meets for a two day policy meeting beginning on Wednesday. The meeting will likely drive prices lower as most expect the bank to signal an earlier than expected rate cut, which would drive the dollar upward.