Brent Crude Slips Towards US$102
Brent crude fell towards $102 a barrel on Tuesday on concerns of slowing oil demand growth due to weak economic recoveries in China and Europe, although new unrest in OPEC oil producer Libya kept losses in check.
* Weak factory data in China, Europe raise oil demand concerns
* Libya government loses control of ministries
* Libya's oil output at 700,000 bpd
* North Sea Buzzard oil field shut again - sources
Euro zone manufacturing growth slowed slightly more than initially thought in August, while growth in China's factory sector slipped to a three-month low last month, adding to concerns about oil demand.
Brent prices have trended higher since mid-August as speculators have come back into the market following a drop of nearly $15 to around $101 a barrel over the previous two months.
"Still, the economic recovery in Europe and especially in China is not strong, and we've seen no supply shortages in Iraq," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"There is no real direction in the market until heating oil demand kicks in closer to winter. We think the decline in oil prices has stopped and it will not go below $100, but upside is also limited at the moment," Hasegawa said.
Brent crude for October delivery was 26 cents lower at $102.52 a barrel at 0707 GMT. The contract ended the previous session 40 cents lower.
U.S. crude was down 32 cents from Friday's close, at $95.64 a barrel. Trading in the United States was shut on Monday for the Labor Day holiday.
Renewed fighting in Libya could dent hopes of higher crude exports from the OPEC member, after the government said it has lost control of most ministries and state institutions located in Tripoli to rival armed groups.
The violence comes as the North African country has raised oil production to 700,000 barrels per day (bpd) from as low as 155,000 bpd in May, although still much below its potential of 1.6 million bpd.
Iraq's oil exports fell in August to an average of 2.375 million bpd from 2.442 million bpd in the previous month, mainly due to bad weather.
Iraqi exports from its southern ports have largely remained unaffected by fighting in the country. But shipments from the northern oilfields of Kirkuk have been shut since March 2 due to attacks on a pipeline to Turkey, keeping total exports below their potential.
Physical demand for crude oil has plummeted in recent months, creating a glut in Asia and the Atlantic basin and causing the futures market to flip into contango - a market where future prices are higher than for immediate delivery.
"With the weakness of the physical market having reached a level where traders ponder (floating) storage plays, the age of super-contango will flash through the heads of key OPEC players," analysts at JBC Energy said in a note.
"We expect core OPEC countries to curtail output in line with their market perceptions, with a Saudi 500,000-bpd cut in just two months in late 2012 giving an indication of what can be done easily," they said.
Output from Britain's Buzzard oilfield has stopped again after returning from maintenance last week, trading sources said on Monday, as the field endures a stuttering return to full output after summer work on the rig.
Buzzard is the biggest contributor to the Forties oil stream, one of the four benchmark crudes underpinning the price of Brent crude oil futures, and is closely-watched by oil traders.
By Jacob Gronholt-Pedersen