Oct. 21 (Bloomberg) -- Brent crude dropped, heading for its first weekly decline in three, amid concern that demand may fall after German business confidence tumbled to a 16-month low.
Futures fell as much as 0.5 percent and are poised for a 4.5 percent slide this week. The Munich-based Ifo Institute’s business climate index dropped to 106.4 this month from 107.4 in September, the lowest since June 2010. Brent’s premium to WTI narrowed amid speculation that Libya will start increasing supplies. The death of the former leader Muammar Qaddafi will expedite the return to normal output levels, state-run National Oil Corp. said.
“We’re getting relief on the supply side and on the demand side,” Axel Herlinghaus, senior commodities analyst at DZ Bank AG, said from Frankfurt. “Brent crude can’t stay at $110.”
Brent oil for December settlement fell 36 cents to $109.40 a barrel on the London-based ICE Futures Europe exchange as of 9:23 a.m. local time. The European benchmark contract was $23.37 more than New York crude, compared with yesterday’s close of $23.69 and a record of $27.88 on Oct. 14.
Futures for December delivery dropped 8 cents, or 0.1 percent, to $85.99 a barrel in electronic trading on the New York Mercantile Exchange. The contract yesterday fell 0.3 percent to the lowest close since Oct. 13.
‘Sirte is Liberated’
Qaddafi’s death in his home town of Sirte yesterday “will help in getting a lot of fields back into production as soon as possible,” Nuri Berruien, the chairman of National Oil, said in a telephone interview from Libya. “Now that Sirte is liberated, people can move quickly. People can go to the fields that are in the west.”
Fighting has reduced the availability of light, sweet crude, or oil with low density and sulfur content, from Libya, a member of the Organization of Petroleum Exporting Countries. The country’s output fell to 45,000 barrels a day in August from pre-crisis levels of about 1.6 million, according to data compiled by Bloomberg. The North African nation pumped 100,000 barrels a day last month.
“Qaddafi’s capture won’t have any impact on the oil market,” said Alexander Ridgers, London-based head of commodities at CMC Markets, which handles about $160 million a day in crude contracts. “It’s not as though he was still running the country.”
--Editors: Raj Rajendran, Rob Verdonck.
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