Brent crude oil slipped on Monday as forecasts for ample supplies in the Atlantic basin and weak demand in Europe and Asia mitigated fears of escalating tension in Ukraine and the Middle East.
Oil prices on both sides of the Atlantic were down in early afternoon trading as reports emerged that North Sea and West African physical crude markets were oversupplied, with sellers discounting heavily to attract buyers such as refiners.
North Sea crude oil cargoes for immediate lifting are trading at deep discounts to later ones, at more than $1.50 per barrel below the front futures month. Traders reported about 30 million unsold barrels of West African crude for lifting in August, and September cargoes were already becoming available, further depressing the market.
"The market is now focusing on weak fundamentals," said analyst Gene McGillian of Tradition Energy in Stamford, Connecticut. "If it wasn't for the geopolitical risk we priced in last week, the market would be at an even lower level."