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Brent oil sinks to 9-month low, WTI falls before supply data

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Investing.com -

Investing.com - Brent oil futures sank to a nine-month low on Tuesday, as global supplies were seen as ample despite ongoing violence in Ukraine and Iraq.

On the ICE Futures Exchange in London, Brent oil for September delivery tumbled 1.01%, or $1.06, to trade at $103.62 a barrel during U.S. morning hours.

The September Brent contract hit a session low of $103.35 earlier, the weakest level since November 8.

Meanwhile, the more actively-traded October contract slumped 0.92%, or 97 cents, to trade at $104.46.

The International Energy Agency cut its demand-growth forecast for 2014 to 1 million barrels a day, down 180,000 barrels per day, saying it expects weaker-than-expected demand in the second quarter.

"Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin," the IEA said in July monthly oil-market report.

Meanwhile, market players awaited new developments from Ukraine and Iraq.

In Ukraine, a Russian convoy of 280 trucks carrying humanitarian aid set off on Tuesday amid Western warnings against using help as a pretext for an invasion.

Ukraine has claimed that 45,000 Russian troops have amassed on its border, while NATO warned that there was a "high probability" Moscow would intervene militarily in the country's east, where government forces are closing in on pro-Russia separatists.

Meanwhile, in Iraq, Haidar al-Abadi, the deputy speaker of parliament, was named as the new prime minister on Monday in place of Nuri al-Maliki, but Maliki has refused to step down and deployed special forces in Baghdad.

Maliki said the decision was a "dangerous violation" of the constitution and vowed to "fix the mistake".

U.S. President Barack Obama said the naming of Abadi was an important step for Iraq towards rebuffing Islamic State militants.

The U.S. recently began air strikes targeting jihadi militants from the Islamic State insurgent group in the northern part of the country in an effort to protect Iraqi civilians from the uprising as well as U.S. personnel in the country.

Market analysts said U.S. airstrikes might lower the risk of oil supply disruptions from the country.

Iraq produced approximately 3.5 million barrels a day of oil last month, making it OPEC's second-biggest oil producer behind Saudi Arabia.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in September declined 0.72%, or 71 cents, to trade at $97.37 a barrel.

Traders awaited key U.S. weekly supply data to gauge the strength of oil demand from the world's largest consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles fell by 2.2 million barrels in the week ended August 15.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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