Brent circling around $100

Brent oil plunged after OPECs meeting in Vienna on May 31 where leaders decided to not change the 30 million barrels per day output ceiling. Further pressure on oil prices, both Brent and WTI, was put by disappointing economic data from China on Saturday, which spurred concern about demand as China is the second biggest world oil consumer and accounts for more than 10% of the global consumption.

Brent oil for July delivery fell below $100 a barrel earlier during the Asian session for the first time in a month. It was followed by a rebound, reaching $100.30 a barrel at 6:30 GMT, up 0,19% on the day.

WTI crude for July delivery traded at $91.82 a barrel at 6:32 GMT, down 0,17% on the day.

Oil prices lately have largely been influenced by concern of limited global demand. OPEC representatives said their main concern is oil demand and not competition. Rafael Ramirez, Venezuela’s oil minister commented May 31: “What we are concerned about is the demand side. The economic crisis in the European Union and the U.S. puts demand in some danger. We have a greater preoccupation with demand, than non-conventional oil.”

Ric Spooner, chief market analyst at CMC Markets in Sydney commented: “We’re in the situation where the market is vulnerable to downside risk because of the supply situation with a well-covered market. We may see seasonal pick-up in demand, but if you look at the overall annual demand, there is more than enough supply to meet that.” He predicted that Brent will trade between $96.75 and $98.75 a barrel over the next few days and WTI will range between $90-$92.50.

U.S. Crude Oil Inventories increased by 3 million barrels the week ending May 24 and reached 397,6 million barrels, showed the U.S. Energy Information Administration’s report on May 30. Forecast was for a decline of 600 000 barrels to 393,8 million. Crude oil inventories stood at 394,6 million barrels the preceding week, when stockpiles declined by 350 000 barrels. U.S. gasoline stockpiles fell surprisingly, but the drop wasnt enough to pressure oil prices up, as it only made up partially for the gains in the previous periods. WTI crude prices dropped 2.3% last week and 1.6% overall in May.

Negative economic data from China adds to the pressure laid upon oil. The official PMI for the non-manufacturing sector fell to 54.3 in May, which is the lowest since September 2012. Chinas official government manufacturing Purchasing Managers Index rose by 0.2 to 50.8, but still remained near the neutral level of 50. Last week The IMF cut its economy growth forecast for China to 7.75%, down from 8%. The Organisation for Economic Co-operation and Development also trimmed its forecast to 7,8% from 8%. This, coupled with Chinese leaders saying they will tolerate a slower, but more ecological friendly expansion keeps raising concerns about oil demand in the worlds second biggest consumer.