Brent North Sea crude oil dropped to a one-year low point on Wednesday as weak demand expectations help offset potential supply disruptions caused by the Ukraine crisis and Iraq unrest.
Brent, the European benchmark, dropped at one point to $102.37 a barrel — the lowest level since July last year.
The contract for delivery in September later pulled back to stand at $102.90 a barrel in London midday deals, down 12 cents compared with Tuesday’s close.
US benchmark West Texas Intermediate for September slipped 13 cents to $97.24 a barrel.
Cutting its demand outlook for this year and next, the International Energy Agency had on Tuesday said that “the oil market today looks better supplied than expected”.
Oil price declines were “mainly due to the IEA report, with an unwinding of risk premiums associated with conflicts in Iraq and Ukraine”, said Ric Spooner, Sydney-based analyst at traders CMC Markets.
“There is an understanding in the market now that there is a significant supply buffer in global markets in the case of a supply disruption,” he told AFP.
Oil prices have been supported by a risk premium in recent months on armed insurgencies in crude producer Iraq as well as Ukraine, a key conduit for Russian energy exports to Europe.
Spooner said that investors will look next at the latest US stockpiles report to be released on Wednesday for clues about demand in the world’s top crude consumer.