Expectation of demand dip sees oil prices fall below $98 a barrel | WPN World People News

Continuing a downward movement, crude oil prices dipped below $98 a barrel Monday as election results in Europe and US employment data released last week depressed sentiments in expectations of slower economic growth and fall in energy fuel demand.

In the US, the price of oil dropped Monday to its lowest level of the year to $97.39 per barrel, a drop of $1.10 a barrel. It fell as low as $95.34 per barrel earlier in the day, 10 cents below the previous low set on Feb. 2.

Prices of the Vienna based Organization of Petroleum Exporting Countries (OPEC) also remained weak with crude oil prices in the first week of May falling to $115.7 per barrel. Brent crude lost 48 cents to $112.70 per barrel in London.

Since mid-March, OPEC oil prices have fallen for seven consecutive weeks by 6.54 percentage points.

The world's largest oil consumer, the US is expected to have lower demand with the latest employment data revealing that manufacturing and services jobs increased at a lower pace in April than what was anticipated.

According to figures released Sunday by the U.S. Department of Energy, crude oil reserves have increased to the highest level over nearly 21 years.

The vote against austerity in Europe and the persisting concerns over debt crisis is slowing growth in several countries including in Italy, Spain, France and Greece.

While demand is expected to fall, the world's crude oil supply situation looks stable.

A survey published by Reuters showed that OPEC average crude oil production reached 31.75 million barrels per day in April, representing the highest level since 2008.

Analysts said investors were also awaiting this week a series of reports on oil markets from the International Energy Agency, OPEC and others, which are expected to show rising stockpiles of crude.

"Lackluster macroeconomic conditions, easing global tensions and bearish fundamentals have started to weigh on oil prices," Morgan Stanley said in a report.

Oil prices declined after voters in France and Greece rejected incumbent leaders who supported austerity measures to fix the region's struggling economy.

Analysts warned that the election results could derail the eurozone's plan for recovery if the government austerity measures are abandoned leading to worsening of the region's debt problems.

In fact, an economic slowdown in Europe could drag down other major economies, including the U.S. and China that rely on European demand to export their goods and boost manufacturing.

In the U.S., retail gasoline fell 2.5 cents over the weekend to a national average of $3.777 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service.

"Economic indicators both in the U.S. and Europe are taking on a more negative appearance," energy trader and consultant Ritterbusch and Associates said in a report.

Source: France News.Net