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5 years ago
Brent slips below $108 as IEA cuts demand outlook, supply rises
November 14, 2012 / 3:27 AM / 5 years ago

Brent slips below $108 as IEA cuts demand outlook, supply rises

* Iranian oil exports rebound, demand outlook weakens - IEA

* US crude inventories seen higher, products draw down-

* Asian stocks, euro steady but U.S., Greek fears linger

* Coming Up: U.S. Retail sales Oct; 1330 GMT

By Manash Goswami

SINGAPORE, Nov 14 (Reuters) - Brent crude slipped below $108 a barrel on Wednesday, declining for a third day after the International Energy Agency (IEA) further cut its demand outlook for the fourth quarter and 2013 amid a rebound in oil exports from sanctions-hit Iran.

The adviser to industrialised nations on energy policy said OPEC-member Iran's exports jumped by a third to 1.3 million barrels per day in October from the earlier two months. That added additional pressure on prices already weak as the United States and Europe grapple with their financial woes.

Brent crude declined 12 cents to $108.14 a barrel by 0314 GMT, after ending 81 cents lower. U.S. oil gained 4 cents to $85.42, reversing from two days of losses.

"There is selling at both ends - one because of a weak demand outlook and, two, because of rising supplies," said Ben Le Brun, a market analyst at OptionsXpress. "The negatives have completely outweighed the positives."

Iranian oil output rose by around 70,000 bpd to 2.7 million bpd in October, and exports recovered as China and South Korea bought more oil from the Islamic Republic, the IEA said.

On the demand front, the agency cut estimates for global oil demand for the fourth quarter by around 300,000 bpd from last month's report in the wake of Hurricane Sandy. Global demand is now forecast to grow by 670,000 bpd this year and by 830,000 in 2013 to 90.4 million bpd -- 100,000 bpd lower than last month.

Oil and broader financial markets have remained under pressure due to a U.S. fiscal policy standoff and uncertainty over the euro zone's debt problems.

U.S. lawmakers gathered in Washington on Tuesday to start talks on a deal to tackle the country's finances.

DEMAND OUTLOOK

President Barack Obama wants to extend the individual income tax rates for 98 percent of Americans and not to the top 2 percent of earners. Republicans are opposing any tax increases. The two sides need to reach a deal to avoid the jolt of $600 billion in deficit-reduction measures they all agreed to in August 2011.

"The United States cannot afford not to resolve it, so there might an 11th hour agreement," said Le Brun. "Till then, there will be a lot of uncertainty and that will weigh on markets."

Over in Europe, Greece's international lenders gave the country more time to fix its budget, though they did not disburse the aid it had hoped to refinance its debt.

Prices are also under pressure on expectations U.S. crude oil inventories rose last week as big East Coast refineries were yet to resume normal operations after disruptions caused by Hurricane Sandy, a Reuters poll of analysts showed.

Crude inventories were seen up 1. 9 million barrels for the week ended Nov. 9. All but one analyst saw a build in crude stockpiles in the weekly data from the federal Energy Information Administration, which has been delayed by a day due to the Veterans Day holiday.

Reporting by Manash Goswami, Editing by Jonathan Thatcher

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