London - Brent crude oil slipped below $112 a barrel on Monday as Europe stumbled over attempts to solve the euro zone debt crisis, strengthening investor fears commodity demand growth may slow.
Oil slid with stock markets, metals and the euro, while the dollar and gold rose. Markets are seeking safer assets ahead of a Federal Reserve meeting that may hint at further measures to bolster the world’s biggest economy.
Brent crude fell $1.01 to a low of $111.21 a barrel before recovering a little to trade around $111.75 by 08:40 GMT. U.S. crude slipped $1.44 to a low of $86.52.
“Financial markets want a precise and clear plan on how to deal with the European debt crisis, but they are not getting it,” said Christophe Barret, global head of oil research at French bank Credit Agricole. “The economic backdrop is weak.”
U.S. housing data later on Monday could provide some guidance on the state of the world’s biggest economy and an overall picture for oil demand.
Investors also awaited the outcome of a meeting of the U.S. Federal Reserve on Wednesday and a G20 gathering on Thursday and Friday for clues on steps governments and policymakers may take to restore market confidence.
Brent will remain neutral and stay in a range of $110.42-$116.60 per barrel, with a downside bias, while a bearish target has been established for U.S. oil at $85.52 per barrel, according to Reuters technical analyst Wang Tao.
An EU finance ministers meeting in Poland over the weekend broke no new ground in dealing with the crisis, prompting market players to reduce risk. Greece failed to announce new austerity measures even after pledging to take tough decisions needed to secure more international aid and avoid default.
That led to the euro edging back towards a seven-month low against the dollar reached last week.
Analysts are assessing when Libya can start exporting oil as winter approaches in the northern hemisphere. Before the uprising against Muammar Gaddafi, Libya exported about 1.6m barrels per day (bpd) of crude oil.
“The most recent news on Libyan oil output are encouraging,” said Barret. “It looks as if production could be as much as 200 000 bpd by the end of this month.”
OPEC Secretary General Abdullah al-Badri said on Monday Gulf OPEC countries were likely to cut output gradually as Libya’s production recovered towards pre-war levels.
Badri, who was Libyan energy minister 1990-2000 and headed its National Oil Corporation until 2006, said production in fields in central Libya could be back to pre-war levels in 15 months, while other areas might take longer.
North Sea crude oil production is also increasing slowly. BP said it restarted its Valhall production and compression platform on Sept. 17 and oil exports from the facility would rise over the coming days.
Fears of the unrest spreading to other nations in the Middle East and North Africa as Yemen steps up attacks on protesters helped support prices, traders said.
At least 26 people were shot dead and hundreds wounded when security forces fired on demonstrators who charged police lines in the capital Sanaa, in a dramatic escalation of protests against President Ali Abdullah Saleh.