LONDON,(Reuters) – Oil fell below $115 a barrel on Friday as signs of weakness in the global economy weighed on the demand outlook, although a host of supply-side concerns kept losses in check.
Crude was still heading for a fourth weekly gain because of lower exports from Iran, a drop in North Sea supply due to oilfield maintenance and the risk of weather-related disruption to Gulf of Mexico output.
Brent crude fell by 33 cents at $114.68 a barrel by 1351 GMT, leaving it on course for a 0.8 percent gain on the week. U.S. crude was up 18 cents to $96.45.
“The speculation about stimulus measures to be taken by the U.S. Federal Reserve coupled with geopolitical tensions and possible production outages in the Gulf of Mexico next week due to tropical storm Isaac are likely to preclude any further decrease in prices,” said Carsten Fritsch, analyst at Commerzbank.
Hopes about the prospect of monetary stimulus that could support economic growth and oil demand are arising before Fed Chairman Ben Bernanke and other central bank leaders meet in Jackson Hole, Wyoming, next week.
European equities were lower on Friday, weighed by concern about the euro zone debt crisis. Reports on Thursday showed China’s factory sector contracted in August and a rise in new U.S. jobless claims.
On Friday, data showed new orders for long-lasting U.S. manufactured goods surged in July, but kept the prospect of a third round of quantitative easing (QE3) alive in one oil analyst’s view.
“The durable goods report was not strong enough to derail QE3 hopes, but not weak enough to spark immediate stimulus action, so it didn’t change that dynamic for oil, while the products are being supported ahead of the weekend by the storm threat,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Traders watch Atlantic storms in case they disrupt U.S. Gulf oil and gas operations. Tropical Storm Isaac has become a little stronger, the National Hurricane Center said.
Analysts at Weather Insight, a Thomson Reuters company, gave Isaac a 50 percent chance of moving into the heart of the oil and gas producing region. Another storm, Joyce, has weakened to a depression.
Brent’s settlement on Thursday at $115.01 was barely above $115, a technical level that has stood in the way of a further rally this week. Thursday’s close was not strong enough to overcome the resistance, one chart-watcher said.
“We do not consider it enough. If the level fails again tonight then the weekly charts will reinforce the resistance status of $115.00,” said Olivier Jakob, analyst at Petromatrix.
Iran and the fighting in Syria remain a focus for the market. Iran is holding talks on Friday with the U.N. nuclear watchdog about the Islamic state’s atomic activities.
Tensions went up another notch on the eve of Friday’s talks when diplomatic sources said Iran had installed many more uranium enrichment centrifuges at an underground site.