Brent crude oil tumbled below $102 on Friday morning after rising US stockpiles and waning global demand pressured prices. The commodity traded at $101.66 at 7:35 GMT on Friday morning.
The US Energy Information Administration released a surprising report this week that showed crude stockpiles had risen by 3 million barrels in the week that ended on May 24. The rise was unexpected after most analysts had predicted a 400,000 barrel fall. Rising inventories during the US' peak driving season indicates an imbalance between the current supply and demand.
Outside the US, many are worried about Chinese consumption after a recent string of poor data suggested that the number two oil consuming nation's recovery was stagnant. Later on Friday, investors will be watching for China's PMI, which most expect to show a decline. According to Reuters, a poll showed that the nation's PMI is likely to have fallen from April's 50.6 to 50.1 for May.
Also later on Friday, the Organization of the Petroleum Exporting Countries is set to meet to discuss its output targets for 2013. The markets are expecting OPEC to continue with its 30 million barrels per day production quota, however some analysts are suggesting there is a possibility that the organization could cut its output.
Due to rising inventories and the risky global demand outlook, OPEC could have some incentive to tighten up supplies in order to keep Brent prices above $100 for the remainder of the year. Since $100 is the break even point for several OPEC nations' budgets, it will be important for the group to discuss this possibility.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Copyright Benzinga. All rights reserved.