Brent oil price closes week at 7 month lows on economic concerns

Brent oil prices have fallen back lower in the last trading day of September, finishing the session back at 7 month lows as investors continue to see problems with the economic situation in Europe and beyond.

Brent Oil Futures – Closing Price

ICE Brent crude oil futures for November 2011 delivery ended the week’s trading session at $102.23 a barrel on the ICE Futures Exchange, $1.73 lower than last week’s closing price of $103.96 a barrel. The contract traded 1.7 percent lower yesterday.

Economic Concerns Hit Markets

Worries about a Greek default, slow growth in China and an anemic US economy saw most stock markets sell off again on Friday and oil prices followed the markets lower again. However some analysts are not so bearish for the short term price of oil futures.

“Crude oil has been holding up quite well compared with the other asset classes such as equities. Sentiment is negative but demand is still there, especially coming from the emerging markets, from China and India.” said Ker Chung Yang, a commodities analyst at Phillip Futures, Singapore.

China’s manufactuing sector, contracting for a third consecutive month in September prompting worries about the health of the world’s second largest economy.

Brent crude oil prices are down over 10 percent for September, and the Brent contract last traded at $102 a barrel way back in February.

Brent Oil Price Forecast

Morgan Stanley cut its Brent forecast for next year to $100, down from $130 previously because of increasing supply and a weaker oil demand outlook.

Production capacity in OPEC will climb almost 800,000 barrels a day in 2012, led by the return of Libyan fields, said Hussein Allidina, the head of commodities research at Morgan Stanley, New York. Non OPEC crude oil output will rise by 225,000 barrels per day.

Slowing global economic growth should weigh on crude oil demand, with consumption forecast to increase by 600,000 barrels per day next year, down from a gain of 950,000 bpd this year and 2.7 million bpd last year.

Risk aversion should drive strength in the US dollar, which will be a headwind for oil prices, Mr Allidina said. “Brent has experienced significant sell offs this summer.”

Brent oil prices have swung sharply over the past few weeks, affected by volatility in global stock markets. Investors and traders are increasingly worried that the global economy is headed back into a recession amid staggering debt concerns in Europe.

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Brent oil price closes week at 7 month lows on economic concerns