Brent Trades At $105 As Global Demand Wanes

Published 04/09/2013, 07:23 AM
Brent crude oil dipped below $105.00 on Monday after choppy trading brought prices down. The commodity reached above $105.00 on Tuesday morning following data that showed China's inflation eased in March and traded at $105.18 at 6:23 GMT. Oil prices have been under heavy pressure this year as slow growth in the world's top consumers have reduced demand and raised oil inventories.

In Europe, unpopular austerity measures enforced by the region's central bank have created growing social and political tension. After uncertainty caused by the botched Cyprus bailout plan began to fade away, Portugal stepped into the spotlight when its high court deemed the EU's next round of mandated cuts unconstitutional.

The ruling means the Portuguese government will need to come up with 1.3 billion euros in order to unlock the next installment of bailout money. The rejection underscored a growing anti-austerity attitude within the bloc.

Brent found support after the Bank of Japan announced a massive stimulus program in which the central bank would flood the nation's economy with $1.4 trillion over the next two years.

However, when the bank began its first round of bond purchases, crude oil gains were limited. According to Reuters, although the stimulus program is expected to lift commodity prices, the strength of the dollar could cap those gains.

Geopolitical worries underpinned Brent prices as tension between the West and Iran over Tehran's nuclear capabilities showed no signs of easing even after the two sides met to negotiate over the past weekend.

US Secretary of State John Kerry made statements on Sunday indicating that world powers were not willing to negotiate forever, which added fuel to concern that the stalemate between the two sides could end badly and cause a supply disruption.

BY Laura Brodbeck

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