New York: Brent crude oil futures dropped below $96 a barrel on Wednesday to a two-year low as rising supply from Africa and Iraq offset mounting tensions in the Middle East and stronger-than-expected growth expectations in China.
Weak European economic data and a rise in oil exports from Iraq, Libya and Nigeria have eroded the oil price, which is down around 14 percent this quarter, the biggest quarterly drop since the second quarter of 2012.
US crude reversed earlier losses to trade higher following a report that stocks fell 4.3 million barrels last week to 358 million barrels, compared with analysts` expectations for an increase of 386,000 barrels. Nevertheless, crude stocks at the Cushing, Oklahoma, delivery hub rose by 191,000 barrels, the government`s Energy Information Administration said.
Brent crude for November delivery was down 70 cents at $96.15 a barrel by 12:51 EDT (1651 GMT) after hitting a session low of $95.60, its lowest since July 2012. It was down more than 6.5 percent for the month so far, the biggest monthly drop since April 2013.
US crude rose by 8 cents to $91.64 a barrel as the unexpected drawdown in weekly US stocks offset earlier losses that had dragged it down to $91.12.
The spread between the two benchmarks stood at $4.51 after narrowing to $4.09 earlier in the session, the second-narrowest intraday point since April.
Libya`s national oil production is currently at 900,000 barrels per day (bpd), with the major El Sharara oilfield at 200,000 bpd, an official with the National Oil Corporation said on Wednesday.
Exports from Iraq`s southern terminals have averaged 2.58 million bpd, according to shipping data for the first 23 days of September tracked by Reuters, up from the August average of 2.38 million.
Nigeria`s oil exports are expected to hit a 14-month high in November, adding more light, sweet crude oil to an already well supplied market.
The European Central Bank faces an uphill task to spur growth as euro zone business activity expanded at a slightly weaker pace than expected in September and firms cut prices for the 30th month in a row, a survey showed.
Manufacturing and services output in the bloc`s top two economies, Germany and France, has also slowed.
In China, August crude inventories, excluding strategic reserves, were higher than the previous month.
However, the International Monetary Fund said it expected China`s 2015 economic growth to be "well above" 7 percent.
Technical analysts said there was little to stop Brent slipping towards $90 per barrel.
"There`s not a lot to stop the trend breaking down further," said Lynnden Branigan, a technical analyst at Barclays Capital.
"There`s extreme selling pressure, and after the July 2012 low of $95.30, the next support is at $91.85."
