Brent crude declined for a third day to its lowest in nine months as the International Energy Agency said a supply glut was shielding the market against threats in the Middle East. West Texas Intermediate also fell.
Futures slid as much as 1 percent in London, heading for their biggest drop in a week. The Paris-based IEA cut projections for oil demand growth this year and next and estimated that output from the Organization of Petroleum Exporting Countries rose to a five-month high. Still, the political crisis in Baghdad escalated as Prime Minister Nouri al-Maliki rejected a plan for succession as militant Sunni fighters of the Islamic State held swaths of the country.
“None of the geopolitical developments impact short-term supplies,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London, said in a report. “Crude inventories are plentiful.”
Brent for September settlement dropped as much as $1.03 to $103.65 a barrel on the London-based ICE Futures Europe exchange, the lowest intraday level since Nov. 8. It traded for $103.98. The volume of all futures traded was about 61 percent above the 100-day average. The European benchmark crude was at a premium of $6.54 to WTI, compared with $6.60 Monday.
WTI for September delivery fell as much as 98 cents to $97.10 a barrel in electronic trading on the New York Mercantile Exchange. Prices are down 1 percent this year.
The IEA reduced estimates for global oil demand growth by 180,000 barrels a day in 2014 and by 90,000 barrels in 2015. The annual expansion in fuel consumption slowed to 700,000 barrels a day in the second quarter, the lowest level since early 2012.
“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,” said the agency, which advises 29 nations on energy policy. Oil consumption will increase by 1 million barrels a day, or 1.1 percent this year, to average 92.7 million a day, the IEA said in its report. Global consumption will expand in 2015 by 1.3 million barrels a day to 94 million.
In a late-night address on state TV Monday, Iraq’s al- Maliki defied pressure from some fellow Shiite political figures and U.S. President Barack Obama to step aside. The country’s crude output dropped 120,000 barrels a day to 3.1 million a day in July from June, according to the IEA.
Crude output from OPEC’s 12 members climbed 300,000 barrels a day in July to a five-month high of 30.44 million a day as Saudi Arabia raised production and supplies recovered in Libya, according to IEA.
U.S. crude inventories declined for a seventh time in the week ended Aug. 8, according to a Bloomberg survey before an Energy Information Administration report tomorrow. Gasoline supplies shrank while distillate stockpiles grew, according to the survey.
Crude stockpiles in the U.S. probably shrank by 1.75 million barrels to 363.9 million, according to the median estimate of eight analysts surveyed by Bloomberg before the EIA report. Stockpiles dropped to 365.6 million barrels in the week ended Aug. 1, the lowest level since Feb. 28, according to the EIA.