Oil Prices Flat As Supply Concerns Ease
VIENNA, Austria – Crude oil prices held mostly steady Tuesday as concerns eased about supply disruptions caused by Hurricane Emily in the Gulf of Mexico, and ahead of U.S. petroleum stocks data.
Analysts said traders appeared comfortable with price levels that are still relatively high with some production losses linked to the storm and expectations of falling U.S. crude stocks due to strong refinery outputs.
Light, sweet crude for August delivery was down 15 cents to $57.17 a barrel on the New York Mercantile Exchange by midday in Europe. Heating oil and gasoline were little changed at US$1.6327 and US$1.6440 a gallon.
On London’s International Petroleum Exchange, September Brent crude oil futures were trading at US$56.97 a barrel, down 2 cents.
Many traders were taking a wait-and-see attitude while they gauged mixed news out of the Gulf of Mexico.
Storm forecasters have predicted since the weekend that Emily would not hit U.S. oil rigs in the Gulf of Mexico, calming fears of major supply disruptions in the region that produces 30 percent of U.S. output.
But oil monopoly Petroleos Mexicanos suspended nearly all – or 1.87 million barrels – of its crude exports due to the storm. It also closed its two main crude oil loading ports and stopped daily production of 2.95 million barrels of oil per day.
Mexico exports around 80 percent of its 3.4 million barrels worth of daily production to the United States. Fifteen thousand Petroleos Mexicanos workers were evacuated from offshore rigs Monday.
Traders were hoping that Wednesday’s U.S. petroleum inventories report would suggest how badly the young Atlantic hurricane season had hurt production at offshore rigs.
“Traders don’t have any reasons to buy now,” said chief commodities strategist Tetsu Emori at Mitsui Bussan Futures in Japan. “They are looking for the chance to buy when it dips, because they are looking more into the future, not the short term.”
Kevin Norrish, head of commodities research at Barclays Capital in London, said that while “there still is concern about the shortages, its not enough to push prices up significantly from where we are now.”
But over the longer term, he said that – with crude inventory levels expected to sink over the coming weeks – “you’re bound to get some volatility.”
The Organization of Petroleum Exporting Countries lowered its 2005 global demand forecast on Monday, citing China’s reduced consumption in the first half of the year and expectations of slower economic growth in other Asian countries.
The cartel said world demand would expand by 1.62 million barrels to 83.66 million barrels daily, 150,000 barrels less than its previous estimate.
The London-based Center for Global Energy Studies said Monday that it does not expect significant growth in oil production figures from non-OPEC nations.
“A steeper-than-expected decline in the North Sea is possible and production in the Gulf of Mexico, still not fully recovered from last year’s Hurricane Ivan, has been hit again this year,” it said.
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Associated Press writer Gillian Wong in Singapore contributed to this report.