Brent crude oil dropped below $103 per barrel in intraday trade on Monday, as Libya pumped in more oil and worries about a flare-up in geo-political tensions in Ukraine and Iraq abated substantially.
Brent crude contract for October delivery declined $1.20 to $102.33 a barrel by 6.48 ET, while US crude for September delivery lost 96 cents to $96.39 a barrel.
Brent crude oil had gained $1.46 per barrel on Friday and the US crude advanced $1.77 after Ukraine said its army had destroyed a large part of a column of armoured vehicles seen entering Ukraine from Russia, stoking fears of a retaliation by Russia-backed separatists.
However, Russia's foreign ministry said on Monday a ‘‘certain progress’’ was achieved during talks among Russia, Germany, France and Ukraine in Berlin on Sunday, which sought to suggest investor fear on Friday about an escalation of the crisis may have been exaggerated. Moreover, US-backed Kurdish fighters regained control of Iraq's largest dam from the Sunni militants after the US conducted a second day of air strikes in the area, in a bid to reverse gains by the Islamic State insurgents.
Importantly, Libya's oil output rose to 535,000 barrels a day (bpd) on Sunday from 400,000 bpd earlier last week weighed on prices substantially. However, oil production in Libya is still much lower than the 1.4 million barrels per day it produced last year before a series of strikes, protests and blockades cut output to as low as 200,000 bpd.
Analysts said while oil supplies have risen and inventory positions improved in recent weeks, oil demand kept low from refineries in Europe and Asia due to the economic slowdown.