Brent slips to $106, economic worries trump lower OPEC output
By David Sheppard
NEW YORK (Reuters) - Brent crude oil fell to near $106 per barrel on Monday as worries that expected stimulus from the United States and Europe may not be enough to lift their slowing economies overshadowed signs of lower production from OPEC in July.
Supply from the 12-member Organization of the Petroleum Exporting Countries (OPEC) fell by 450,000 barrels per day (bpd) in July to 31.18 million bpd, a Reuters survey showed, as Western sanctions further cut supply from Iran and due to reduced shipments from Angola, Saudi Arabia and Libya. <OPEC/O>
"The fundamentals are looking more constructive for the second half of this year, with the supply and demand balance now close to a deficit compared to the large surplus in the first half," said Katherine Spector, a commodity strategist at the Canadian Imperial Bank of Commerce in New York.
"The bearish factor is liquidity. Trading has been relatively slow and hedge funds and other investors don't appear to want to commit in the current economic environment."
Slowing growth in the United States, the world's top oil consumer, has triggered expectations of stimulus measures from the Federal Reserve, which meets on Tuesday and Wednesday.
European Central Bank President Mario Draghi also promised last week to do what it takes to protect the euro, raising expectations of new policy measures to solve the debt crisis when the ECB meets on Thursday.
But analysts say markets may be hoping for too much.
"Speculation over central bank action looks like it has gone too far," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. Continued...