Brent oil falls below $100 a barrel
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Brent crude oil fell below the key level of 100 dollars a barrel for the first time since April 2, sinking as low as 99.30 dollars in London after OPEC's chief signaled the production ceiling would remain unchanged in October.
LONDON - Brent crude oil prices fell below $100 a
barrel for the first time in five months on Tuesday on
expectations that OPEC would leave formal output targets
unchanged and as Hurricane Ike's threat to U.S. Gulf of Mexico
energy infrastructure receded.
London Brent fell $3.88 to $99.56 a barrel -- the
first time world oil prices have traded in the double digits
since April 2 -- while the U.S. benchmark fell $3.55 to
$102.79 a barrel.
OPEC ministers meeting in Vienna were leaning toward leaving
formal output targets unchanged despite some members'
suggestions that a cut is needed to stem a steep decline in oil
prices since mid-July.
But the group could still move quietly to trim excess
output. As a whole, OPEC is estimated to be producing about
790,000 barrels per day above a collective ceiling of 29.67
million bpd for its 12 members with output limits.
Oil has fallen by nearly 30 percent from record highs of
more than $147 a barrel in July, pressured partly by a rebound
in the U.S. dollar and a drop in demand from top energy consumer
the United States.
"OPEC leaving quotas unchanged is a little disappointing for
the market," said UBS oil strategist Thomas Stenvoll.
Adding pressure to prices, forecasters said Hurricane Ike
was likely to cross the Gulf of Mexico well south and west of
the largest cluster of oil and gas platforms before hitting the
south Texas coast at the end of the week -- meaning damage to
the facilities is unlikely.
Nonetheless, energy companies still recovering from
Hurricane Gustav last week began shutting production as a
precaution as Ike approached the region, home to a quarter of
U.S. oil production and 15 percent of natural gas output.
"If this storm does nothing, I think this could be the event
that pushes oil back below that $100 a barrel area," said Phil
Flynn of Alaron Trading.
Some 78 percent of the Gulf's crude oil output was shut
Tuesday morning, and some 12 million barrels of cumulative U.S.
crude oil production has been lost since Gustav formed in late
August, according to the Minerals Management Service.
The impact of the storm shutdowns is expected to be
reflected in weekly U.S. government inventory data, due out on
A Reuters poll of analysts forecast data would show a 4.3
million barrel draw in U.S. crude oil stocks last week. Gasoline
stocks were seen down by 4.2 million barrels and distillates by
2.5 million barrels.
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