Oil prices slump on weakened demand
Slowing economic growth in Europe and China chokes prices
The price of crude oil futures dipped on Monday as strong supply and slowing economic growth in Europe and China conspired to cut production from the Organization of the Petroleum Exporting Countries (OPEC).
Concerns over extended stagnation in Europe, which could pull down other economies, were highlighted at the G20 meeting in Australia on Sunday.
China will not dramatically alter its economic policy because of any one economic indicator, Finance Minister Lou Jiwei said on Sunday.
His remarks came days after many economists lowered growth forecasts for China following the release of data that showed factory output in August grew at its weakest pace in nearly six years.
Investors will look for clues on where demand from China is heading in flash manufacturing PMI data due out on Tuesday.
"China growth is slowing, which is a driver for crude," said Oliver Sloup, director of managed futures at iitrader.com in Chicago.
"Ample supplies continue to be a major factor. Even if OPEC cuts output, it will not have a big affect."
Brent crude for November delivery fell $1.42 to settle at $96.97 a barrel, having dropped $2.01 intraday to $96.38.
The expiring U.S. October crude contract fell 89 cents to settle and go off the board at $91.52 a barrel, down for a fourth consecutive session.
U.S. November crude settled at $90.87, down 78 cents.
OPEC members, many of whom need oil prices above $100 a barrel to meet budgetary needs, will review oil output policy at a meeting on Nov. 27.
Many analysts expect OPEC to cut output to slow the recent price slide, but it is not clear how much impact a reduction would have on prices at a time of oversupply and high inventories.
"Sentiment remains predominantly bearish given downbeat demand growth expectations and plentiful supplies," said Andrey Kryuchenkov, London-based oil and commodities strategist at Russian bank VTB Capital.
"However, I think the downside is limited. The market is very sensitive to supply jitters, given that the risk premium is gone, and judging by the reaction last week to a fresh outage in Libya and OPEC comments."
OPEC's secretary general said last week the group could cut output next year.
Oil production in Libya has fallen to 700,000 barrels per day (bpd), down nearly 20 percent from a week ago as its El Sharara oilfield and Zawiya refinery remain closed, the state-run National Oil Corp said on Sunday.
Geoffrey Howard, North Africa analyst at consultancy Control Risks, told Reuters' Global Oil Forum on Monday that Libyan oil supplies were at risk and likely to fall in the coming weeks.
"Sustained high output levels are highly unlikely," Howard said. "All oilfields are vulnerable to politically motivated unrest," he added.
Fighting has intensified in southern Libya as soldiers and police clashed in the last few days near the El Sharara oilfield.