Brent Crude Price Drops with Weak Eurozone Retail Data

The current crude oil price of Brent fell below $109 a barrel as the weak retail data of the eurozone and the poor employment figures of the U.S. contributed to a rise in the inventory of refined commodities.

Front-month Brent crude futures prices traded lower by $1.18 to $108.66 per barrel, while the U.S. benchmark was 91 cents lower to $87.59.

The eurozone’s retail trade volume dropped 1.2 percent from September to October, the largest fall since the month of April.

The economy of the eurozone, which produces around one-fifth of the world’s crude output, fell into recession in quarter three this year, widely expected to continue through 2012 and beyond.

Analyst Richard Langkemper of Argos North Sea Group in Rotterdam said that, despite last week’s positive U.S. report and this week’s good figures from China, there is still much worry for Europe.

Similarly, the U.S. data also pointed to the challenging conditions of the economy that can restrict oil demand.

Employers in the U.S. private sector created 118,000 jobs last month. That figure is below the expectations of economists.

Moreover, a stronger U.S. currency kept a lid on per barrel oil prices.

Another factor that led to the drop in current crude oil prices is the lingering concern that any delay in a deal to stop the U.S. fiscal cliff may drive the country into recession.

The U.S. President and Republican Congress are still in a battle to stop the fiscal cliff , a program of spending reductions and tax hikes amounting to $600 billion, by the end of this year.

The crude oil supplies of the U.S. posted a higher-than-expected drop in the past week, while the supplies of refined commodities increased more than anticipated as refinery runs rose, according to the recent report of the Energy Information Administration.

Last week’s gasoline inventories in the United States posted their highest weekly rise since September of 2001, with a 2 percent jump in refinery utilization.

The report is firmly bearish and a development that consumers welcomed, according to John Kilduff, New York’s Again Capital partner.

The surge in gasoline stocks erases any remaining supply concerns from Hurricane Sandy.

The drop in the inventories of crude oil, although not small, is an addendum to the report. Gasoline prices will keep on facing downward pressure as the trend of supplies keep on moving up.

By: Chris Termeer