Arab Today, arab today brent around 105 after biggest drop since sept
Last Updated : GMT 21:09:51
Arab Today, arab today
Arab Today, arab today

Brent around $105 after biggest drop since Sept

Arab Today, arab today

Arab Today, arab today Brent around $105 after biggest drop since Sept

Dubai - Arabstoday

Brent crude futures were little changed at $105 on Thursday, after plunging the most in nearly three months in the previous session after Italy\'s borrowing costs skyrocketed and renewed fears about the euro zone\'s debt crisis. Asian shares and base metals fell, while the euro nursed losses after plumbing to its lowest in 11 months. The market view that a European Union summit last week had failed to produce a solution to the crisis was reinforced when Italy was forced to pay a stinging 6.47 percent on 5-year bonds on Wednesday, a record borrowing cost for the euro era. Crude prices were also weighed down by the Organization of Petroleum Exporting Countries (OPEC) which, at a Dec 14 meeting, did not announce a mechanism to quickly trim production in case oil demand grows slower than expected. Brent crude gained 15 cents to $105.17 a barrel by 0247 GMT, after settling $4.48 a barrel lower on Wednesday and posting the biggest one-day percentage loss since Sept. 22. US crude was 1 cent higher at $94.96 a barrel, after settling $5.19 lower on Wednesday, also the benchmark\'s biggest one-day percentage loss since Sept. 22. \"There is still a lot of uncertainty surrounding Europe and that is worrying investors,\" said Ken Hasegawa, commodity derivatives manager at Newedge Brokerage in Tokyo. \"Although there was an agreement, a lot of countries are involved and they need to get the deal cleared,\" he said, referring to last week\'s European summit. On Wednesday, Brent broke below its 300-day moving average of $107.08 and hit a session low of $104.36, the lowest for front-month Brent since Oct 6. US crude also dropped below the 200-day moving average of $95.98. \"A lot of technical levels, like the 200-day moving average, were crossed and that triggered stop-loss selling leading to such a big fall overnight,\" Hasegawa said. Oil prices may come under further pressure after data showed China\'s factory output shrank again in December after new orders fell, entrenching expectations that manufacturers are struggling with waning global demand and tight domestic credit conditions. The HSBC flash manufacturing purchasing managers\' index (PMI), the earliest indicator of China\'s industrial activity, stood at 49 in December, a modest rise from November\'s 47.7 but pointing to a monthly contraction in activity nonetheless. OPEC oil producers agreed to an output target of 30 million barrels per day, ratifying current production near 3-year highs, in a deal that settles a 6-month-old argument over supply policy firmly in Saudi Arabia\'s favour. But OPEC did not discuss individual nations\' quotas, and there was no mechanism in place to cut quotas should already-fragile demand grow less quickly than expected. With output from Libya recovering after months of civil war, a lack of a cutback plan may risk increasing boosting supplies amid slowing demand. \"With OPEC agreeing to set a new output target at 30 million barrels per day, broadly in line with the Secretariat\'s call on OPEC crude for next year, some adjustments to current production allocation between member states will have to be made,\" analysts at Barclays said in a note. The OPEC agreement vindicates Saudi Arabia after its proposal to raise output in June to stem rising prices was rejected by price hawks led by Iran, Algeria and Venezuela. Saudi said it pumped 10 million barrels a day last month, 25 percent above its old OPEC quota, in what Gulf delegates said was a demonstration of strength to the price hawks ahead of the meeting. \"Contrary to market belief, we expect no change in key participants\' desire to defend prices at close to current levels,\" the Barclays note said. \"Hence, Saudi Arabia\'s willingness to continue to act as the swing producer at the margin is not diminished, in our view.\" Oil markets also shrugged off data from the Energy Information Administration showing a 1.9-million-barrel drop in US crude stockpiles last week, though some traders said a 3.8-million-barrel build in gasoline stocks added to bearish sentiment.

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