Brent oil falling fast as European economic fears see crude prices sinking lower

Brent oil opens today’s session another 1 percent down as the European marker for crude oil prices sinks ever lower this week, spurred on by European economic fears and supply, demand imbalances.

Latest Brent Oil Price

In London, Brent crude oil futures for April 2013 delivery was trading at $108.14 a barrel on the ICE Futures Exchange, $1.09 lower than at open. The April futures contract expires today which may cap losses as traders cover positions.

$80 a Barrel by End of 2013?

According to Robert Levitt, CEO and founder of US wealth manager Levitt Capital Management, the days of lofty oil prices are numbered and the price of Brent crude oil is set to fall 30 percent to $80 per barrel by the end of the year.

“Oil prices are coming down and we could see them as low as $80 by the end of the year. This will not be because of an economic collapse like we saw in 2008, but because there is so much shale oil coming out of the US and this phenomenon is not well understood,” he told CNBC last month.

IEA Cuts Global Demand Outook

The IEA (International Energy Agency) yesterday reduced its 2013 oil demand prediction by 60,000 barrels to 90.6 million, it said in its monthly oil market report yesterday, citing “elusive” economic growth. However, global oil consumption this year is still expected to rise by 820,000 barrels a day, or 0.9 percent, the agency said.

Spread Brent / WTI Oil

Brent oil fell for a fifth day as its premium to WTI held near the narrowest in seven weeks. The spread between European Brent and US WTI crude narrowed to $16 yesterday, the smallest gap since 22nd January.

European Economic Fears

Output at euro zone factories fell more than expected at the start of 2013 and production in France and Germany slipped in the latest sign the bloc is struggling to emerge from recession.

Industrial production in the 17 countries sharing the euro fell 0.4 percent in January from December, the EU’s statistics office Eurostat said in a report out yesterday. Economists had forecast a 0.1 percent fall.

Falling industrial production in Europe will no doubt play a part in pushing Brent oil lower, but we will have to wait and see what other factors come into play for a longer view on prices.

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This article was written by: JR @ liveoilprices.co.uk

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Brent oil falling fast as European economic fears see crude prices sinking lower