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Wednesday, July 23, 2008
Oil drops below US$128 a barrel in Asian (12:45 p.m.)
SINGAPORE -- Oil prices slipped further Wednesday after tumbling more than US$3 a barrel in the previous session as a hurricane looked likely to spare key oil installations in the US Gulf of Mexico.
Traders in Asia awaited the release of US oil supply data later in the day that was expected to show a rise in gasoline stocks amid weakening demand in the world's largest energy consumer.
Light, sweet crude for September delivery fell 82 cents to US$127.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell US$3.40 to settle at US$128.42 in the previous session.
The August contract fell US$3.09 to settle at US$127.95 a barrel as it expired at the end of floor trade.
The overnight sell-off dragged oil prices to their lowest level since early June and was crude's fifth decline in the last six sessions.
Prices fell as Dolly - a tropical storm that spun into a hurricane on Tuesday - headed toward the US-Mexico border but grew increasingly unlikely to threaten key oil supply in the Gulf. That gave traders one less reason to buy as a strengthening dollar helped keep prices in check.
The drop offered further evidence that investors are now quickly pulling money out of the market, after driving prices to a record above US$147 only a week and a half ago. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down - just as incremental supply concerns previously drove prices sharply higher.
"Clearly, there's not a lot of price-supporting news in the market, and what was there has been diminished now with Hurricane Dolly," said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.
"This market's still fundamentally quite strong - it's just that we've seen prices coming off from over-inflated levels. The market's letting steam out," Pervan said. "There's genuine reason to be taking profits in this market with the weak US demand numbers."
Crude oil inventories were expected to drop by 1.9 million barrels in the US Energy Information Administration's weekly petroleum supply report, according to the average of analysts' estimates in a survey by energy research firm Platts.
The survey also showed that analysts projected gasoline stocks to rise by 500,000 barrels.
"I suspect we'll see another rise in gasoline stocks, highlighting again that demand is certainly weak," Pervan said.
In its weekly pump spending survey, MasterCard found US gasoline demand dropped last week for the thirteenth week in a row. Demand fell 3.3 percent compared with the same week a year earlier, according to the survey. Since the start of 2008, gasoline demand is down 2.2 percent.
In other Nymex trading, heating oil futures lost 1.82 cents to US$3.66 a gallon (3.8 liters) while gasoline prices dropped 0.74 cent to US$3.1396 a gallon. Natural gas prices added 0.7 cents to US$10.074 per 1,000 cubic feet.
September Brent crude fell 74 cents to US$128.81 a barrel on the ICE Futures exchange in London. (AP) |
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