Brent crude drops below $111 on renewed growth jitters

Mon Sep 24, 2012 3:02pm EDT
 
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By Ramya Venugopal

SINGAPORE (Reuters) - Brent crude futures fell below $111 a barrel on Monday, dragged down by a firm dollar and worries about weak economic growth in key consumer nations.

Although central banks in the United States, Europe and Japan have announced measures aimed at keeping asset markets well supplied with funds, growth concerns have overtaken the initial elation following the stimulus announcements.

"The optimism (over the measures) is gone and investors are starting to realize it's not backed by good economic data," said Jonathan Barratt, chief executive of BarrattBulletin, a commodity research firm in Sydney.

"Investors are not confident, that is why they're punishing commodities, including oil."

Front-month Brent futures had fallen 88 cents to $110.56 by 0634 GMT, while U.S. crude futures were 70 cents lower at $92.19 per barrel. Both contracts shed more than $1 in early trade.

Brent dropped 4.5 percent last week, while U.S. crude lost 6.2 percent on demand worries as well as a pledge by Saudi Arabia to keep prices down.

GROWTH VS STIMULUS

A firm dollar, which makes commodities denominated in the greenback more expensive for investors in other currencies, also deterred buying, adding to the pressure on oil futures.   Continued...

 
A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. South Korea, as a member of the 28-nation IEA, will release 3.46 million barrels oil stocks over 30 days after a meeting with local refiners later on Monday. REUTERS/Jo Yong-Hak