Oil prices near $109 ahead of US inventory data
Stevenson JacobsOil prices hovered near $109 a barrel Thursday ahead of a report on U.S. crude supplies that could show whether an economic slowdown is still curbing fuel usage in the world's thirstiest consumer.
Light, sweet crude for October delivery fell 21 cents to $109.14 a barrel on the New York Mercantile Exchange, but prices fluctuated between positive and negative territory before the release of the Energy Information Administration report, scheduled for 11 a.m. EDT.
On Wednesday, prices settled 36 cents lower at $109.35 a barrel, a day after a dramatic, nearly $6 plunge in response to less-than-feared damage from Hurricane Gustav.
The U.S. Energy Department's EIA report was expected to show that oil stocks rose by 500,000 barrels, according to the average of analysts' estimates in a survey by energy information provider Platts.
The Platts survey also showed that analysts projected gasoline inventories fell 1.8 million barrels and distillates went up 1.1 million barrels during last week.
"I expect the U.S. numbers to show oil demand is weakening," said Tetsu Emori, commodity markets fund manager at ASTMAZ Futures Co. in Tokyo. "The impact from Gustav will be seen in next week's numbers."
Energy output in the Gulf of Mexico began to slowly come back online after the passage of Gustav. Some oil companies in the western Gulf whose equipment wasn't in the path of the storm began ramping up operations Wednesday.
However, about 96 percent of oil production in the Gulf and about 92 percent of natural gas output remained shut down as of Wednesday, according to the U.S. Minerals Management Service, as energy firms assessed platforms, rigs and pipelines and worked to redeploy evacuated workers. The Gulf area is home to a quarter of U.S. oil production and 40 percent of refining capacity.
Crude has dropped about $38, or 26 percent, since surging to a record $147.27 a barrel on July 11, as a U.S. economic slowdown spreads overseas and curbs demand for petroleum products.
"Consuming countries like the U.S. and Japan are facing economic problems," Emori said. "I think we're heading toward US$100 a barrel and if we break that, to between $88 and $95."
In other Nymex trading, heating oil futures fell 1.41 cent to $3.0647 a gallon, while gasoline prices fell less than a penny to $2.7592 a gallon. Natural gas for October delivery lost 15.9 cents to $7.105 per 1,000 cubic feet.
In London, October Brent crude fell 51 cents to $107.53 a barrel on the ICE Futures exchange.
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Associated Press writers Pablo Gorondi and Alex Kennedy in Singapore contributed to this report.