Brent Crude Falls Below US$98
Brent crude dropped below $98 a barrel on Thursday, falling for the sixth straight session, as worries about ample supply and weak demand, which have dragged prices to 17-month lows, outweighed geopolitical concerns in the Middle East.
* US air strikes could threaten Islamic reprisals -risk manager
* OPEC predicts 1 million bpd supply surplus in 2015
* WTI could drop to $85 a barrel -Ayers Alliance
The market was concerned about the impact of the expansion of U.S. military action, with its plans for air strikes in Syria and more attacks in Iraq, on the latter's oil output, said Phin Ziebell, economist at the National Australia Bank in Melbourne. "More broadly, it's one of supply with the U.S. boosting output from unconventional sources, while demand is pretty flat," Ziebell said.
Brent climbed in early trading in Asia after President Barack Obama told the American public on Wednesday that broader military action would be taken against Islamist militants, before prices eased.
"People are worried about unexpected consequences of an escalation with the potential of a greater reaction from jihadists," said Tony Nunan, oil risk manager at Japan's Mitsubishi Corp. "The geopolitical risk is not out of the woods. The potential situation does not look any better."
Brent crude for October delivery was trading 35 cents lower at $97.69 a barrel by 0706 GMT, after closing down $1.12 in the previous session. It hit an intraday low of $97.60 on Wednesday, its weakest since April 18, 2013.
U.S. crude was down 19 cents at $91.48. It fell to $91.22 in the previous session, the lowest since May 2, 2013.
"There's quite a bit of speculation [in Brent]. The moves are exaggerated and we think the declines are a little bit overdone," said Mark Keenan, head of commodities research at Societe Generale in Singapore. The bank is maintaining a trading range of $100-105 per barrel for Brent, Keenan said.
Oil prices on both sides of the Atlantic are down about 2 percent to 3 percent this week, dragged down by high global supplies at a time when demand is weak.
The Organization of the Petroleum Exporting Countries has cut its forecasts for demand for OPEC crude this year and the next, pointing to a surplus of more than 1 million barrels per day in 2015 if OPEC keeps output at current levels.
By Keith Wallis