Brent crude oil falls to 27-month low amid ample global supply

Brent crude fell to a 27-month low on signs that global production growth is outpacing demand. West Texas Intermediate oil dropped in New York. Futures slipped as much as 1.2 per cent in London.

Saudi Arabia cut its oil prices to all destinations, prompting speculation the world's biggest exporter won't lead supply cuts by the Organization of Petroleum Exporting Countries. German factory orders plunged the most since 2009, data showed, amid speculation that slowing European growth will prompt additional central-bank stimulus.

Brent for November settlement slipped 85 cents, or 0.9 per cent, to $91.46 a barrel on the London-based ICE Futures Europe exchange at 11:42 am in New York. The contract touched $91.25, the lowest intra-day price since June 28, 2012. The volume of all futures traded was 5.3 per cent above the 100-day average for the time of day. Brent fell 4.8 per cent last week as Saudi Arabia cut some prices to Asia to the lowest in almost six years.

Opec, which supplies about 40 per cent of the world's oil, pumped 30.935 million barrels a day in September, the most since August last year, according to a Bloomberg survey of producers and analysts.

"The market still has to contend with a lack of demand and excess supply," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone.

The World Bank lowered its forecasts for growth in developing East Asia this year and next as China's expansion moderates. The region is forecast to grow 6.9 percent in 2014 and 2015, down from 7.1 percent projected in April, the Washington-based lender said in its East Asia and Pacific Economic Update released today.

German factory orders, adjusted for seasonal swings and inflation, fell 5.7 percent in August, the Economy Ministry in Berlin said today. Economists predicted a 2.5 percent decline, according to the median estimate in a Bloomberg survey.

German Industry
"The German economic news isn't good, which helps explain why Brent is weaker than WTI today," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone.

Crude rose earlier today as the dollar weakened, pushing a gauge of its strength down from a four-year high. A weaker dollar increases the appeal of commodities to investors looking for a store of value.

November gasoline futures rose 0.75 cent, or 0.3 percent, to $2.386 a gallon on the Nymex. Gasoline pump prices fell 0.8 cent to $3.289 a gallon nationwide yesterday, the least since Feb. 8, according to AAA, the largest U.S. motoring group.

Ultra low sulfur diesel for November delivery fell 1.98 cents, or 0.8 percent, to $2.5965 a gallon. Futures touched $2.5921, the lowest level since June 29, 2012.

Raised Bets
Hedge funds increased bets on rising U.S. oil prices just before they tumbled in the biggest weekly decline in two months. Money managers boosted net-long positions in WTI by 4.1 percent in the seven days ended Sept. 30. Long positions climbed 2.7 percent, U.S. Commodity Futures Trading Commission data show.

"Speculators got on the wrong side of the market last week," Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania, said by phone. "They are now pushing it lower. The markets will remain under downward pressure until all this length is exercised." A weekly report detailing positions held in Brent crude and gasoil has been delayed "due to position reporting issues experienced by a member," ICE Futures Europe said in a circular on its website.