Oil falls below $113 on slowdown, higher output

Tue May 8, 2012 4:38am EDT
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By Christopher Johnson

LONDON (Reuters) - Brent crude oil fell below $113 a barrel on Tuesday in a fifth day of losses as economic slowdown on both sides of the Atlantic deepened fears of lower oil demand at time of ample supply from major oil producers.

Saudi Arabian Oil Minister Ali al-Naimi said on Tuesday the Kingdom was pumping around 10 million barrels per day (bpd), close to its highest for decades, and was storing 80 million barrels in case of any disruption in supplies.

Members of the Organization of the Petroleum Exporting Countries are concerned very high oil prices earlier this year could hit consumption and dent world economic activity.

But global growth prospects have weakened in recent weeks.

Political changes in the euro zone after France elected a new leader and Greece's inability to form a new government have shaken an already fragile outlook for the debt-laden region, while disappointing U.S. jobs data stoked concerns about growth in the world's largest economy.

Brent crude fell 50 cents to $112.66 a barrel by 3:55 a.m. EDT (0755 GMT), down more than 5.5 percent so far in May after five days of falls. U.S. crude also fell for a fifth day, losing $1.14 per barrel to touch a low of $96.80 before recovering slightly.

Eugen Weinberg, global head of commodities research at Commerzbank in Frankfurt said oil was being squeezed from both the supply and demand sides of the market.

"Renewed concerns over the health of the euro zone coincide with weaker growth elsewhere and news of better oil supply," Weinberg said. "Saudi Arabia is pumping plenty of oil and even storing it, so there is no shortage."   Continued...

A motorist prepares to put fuel into her car at a petrol station in Melbourne July 3, 2008. REUTERS/Mick Tsikas