Brent crude fell to the lowest in more than two years after the International Energy Agency cut global oil demand forecasts because of weaker growth.
The IEA reduced demand estimates for this year and next following a “remarkable” slowdown in the second quarter that prompted Saudi Arabia to pare exports to a three-year low. Brent’s premium over West Texas Intermediate narrowed to the smallest since July.
“Demand is the big story here,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “ Supply is so big but demand is not catching up. The IEA report is hitting Brent and the spread is going to continue to contract.”
Brent for October settlement dropped $1, or 1 percent, to $97.04 a barrel at 10:37 a.m. New York time on the London-based ICE Futures Europe exchange after sliding to $96.72, the lowest since July 2, 2012. The volume of all futures traded was about 52 percent above the 100-day average.
WTI for October delivery rose 2 cents to $91.69 a barrel on the New York Mercantile Exchange. The contract earlier fell as much as 1.4 percent to $90.43, the lowest since May 1, 2013. Volume was about double the 100-day average. Brent traded at a premium of $5.35 to WTI on ICE, compared with $6.37 yesterday.