* Factories struggle despite stimulus measures
* U.S. election, fiscal concerns in focus
* Simmering tensions in Middle East offer support
* Coming up: EIA petroleum status report at 1430 GMT
By Ramya Venugopal
SINGAPORE, Oct 3 (Reuters) – Brent crude futures slipped
towards $111 per barrel on Wednesday, hurt by persistent
concerns on global growth and oil demand, while Europe’s
festering debt crisis added to uncertainty.
Simmering tensions in the Middle East kept losses in check,
however, with investors increasingly convinced that a dispute
over Iran’s nuclear programme will drag on.
“It’s hard to get bullish when the numbers are so bad,
especially in China and the euro zone,” said Tony Nunan, an oil
risk manager at Mitsubishi Corp, referring to weak manufacturing
data released this week.
“But prices are not going to fall that far, as the situation
between Iran and Israel will keep the heat under the market
until the end of the year.”
Brent November crude futures had fallen 36 cents to
$111.21 a barrel by 0139 GMT. They ended Tuesday below two
critical technical levels — the 50-day moving average at
$112.06 and the 200-day moving average at $112.09.
U.S. November crude shed 33 cents to settle at $91.57
a barrel. It could drop below $89 per barrel after failing to
break through key resistance at $93.33.
GROWING PAINS
Concerns on global growth intensified this week, after a
raft of manufacturing data showed that companies are yet to
benefit from stimulus measures by central banks and governments.
While manufacturing in the United States grew unexpectedly
in September, the euro zone’s factories suffered their worst
quarter in nearly three years and China appeared to have lost
steam.
Adding to investor worries are next month’s elections in the
United States and the likelihood of a sharp cut in the country’s
budget deficit after the polls, which could hurt a nascent
recovery in the world’s biggest oil consumer.
“(Investors) have to contemplate whether such policy
developments will soon result in genuine broader macro healing,”
Bank of America-Merrill Lynch analysts said in a report.
“We are less sanguine, especially as focus turns to a
potentially negative interaction between the oncoming U.S.
fiscal cliff and the peak of the election season.”
UNDER THE SPOTLIGHT
Supply concerns remain heightened as an ongoing dispute over
Iran’s nuclear programme came back under the spotlight after
last week’s speeches by the heads of states of Iran, Israel and
the U.S. at the United Nations General Assembly in New York.
Sanctions by the U.S. and the European Union on Iranian oil
shipments have left the Middle Eastern nation’s economy reeling,
plunging the currency to a record low on Tuesday.
Investors are also closely monitoring elections in OPEC
member Venezuela, where incumbent President Hugo Chavez is
facing a strong challenge from opposition Candidate Henrique
Capriles.
Venezuela’s crude oil sales remain critical for the heavily
indebted nation’s finances.
Also supporting U.S. crude, data from the American Petroleum
Institute showed that inventories rose less than expected,
adding 462,000 barrels last week, compared with analysts’
expectations for a build of 1.5 million barrels.
The U.S. Energy Information Administration (EIA) will
release its weekly estimates later on Wednesday at 1430 GMT.
(Additional reporting by Wang Tao; Editing by Joseph Radford)
