Oil Falls to 2-Month Low

Discussion in 'Economy' started by Ramapo, Aug 30, 2006.

  1. Ramapo
    Offline

    Ramapo Rookie

    Joined:
    Aug 29, 2006
    Messages:
    31
    Thanks Received:
    4
    Trophy Points:
    1
    Ratings:
    +4
    Oil Falls to 2-Month Low on Report of Unexpected Inventory Gain


    http://www.bloomberg.com/apps/news?pid=20601087&sid=aexlppkC.L7c&refer=worldwide


    By Mark Shenk

    Aug. 30 (Bloomberg) -- Crude oil fell to a two-month low of $68.65 a barrel after an Energy Department report showed a surge in imports led to an unexpected increase in U.S. inventories.

    Supplies jumped 2.48 million barrels to 332.8 million last week, the report showed. A 1.5 million barrel decline was expected, according to a Bloomberg News survey of 15 analysts. Imports jumped 9.4 percent to an average 11.2 million barrels a day, the second-highest ever. A cut in output earlier this month at Alaska's Prudhoe Bay field may have spurred shipments.

    ``High prices appear to have attracted every drop of available oil to the U.S. last week,'' said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago. ``It looks like oil companies rushed to guarantee supply to make up for the missing Prudhoe Bay barrels. Now that prices softened a bit, the flow of imports may slow.''

    Crude oil for October delivery fell 86 cents, or 1.2 percent, to $68.85 a barrel at 11:40 a.m. on the New York Mercantile Exchange. Futures touched $68.65, the lowest since June 21. Prices are 1.3 percent lower than a year earlier. This is the first time futures were lower on a year-on-year basis since March 2004.

    Inventories of crude oil were 12 percent above the five-year average for the week, the Energy Department said. Stockpiles were 11 percent above the five-year average a week earlier. Gasoline, diesel and heating-oil inventories are also above the five-year average, according to the department.

    Brent crude oil for October settlement declined 71 cents, or 1 percent, to $69.16 a barrel on the London-based ICE Futures exchange.

    The department released its weekly report on petroleum inventories at 10:30 a.m. in Washington.

    Prudhoe Bay

    Prices surged after BP Plc, the world's third-largest oil company, said on Aug. 6 that it planned to shut in all 400,000 barrels of daily production at Prudhoe Bay because of corrosion in pipes. BP said on Aug. 28 that output was up to about 200,000 barrels a day. The field is the biggest in the U.S.

    Refineries along the West Coast, particularly those in California and Washington, depend on Prudhoe Bay crude oil supplies. There is no pipeline network linking reserves on the Gulf of Mexico coast to those refineries. Imports to the West Coast jumped 41 percent to a record 1.58 million barrels a day, according to the Energy Department.

    ``The increase in imports occurred mostly on the West Coast so the increase was clearly to make up for Prudhoe Bay,'' said Antoine Halff, an energy analyst with Fimat USA in New York. ``At first it appeared that the outage was going to be worse than was the case.''

    Gasoline Stockpiles

    Gasoline stockpiles rose 367,000 barrels to 206.2 million in the week ended Aug. 25, the report showed. A decline of 600,000 barrels was expected, according to the median of responses. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1.36 million barrels to 136.8 million. Analysts forecast a gain of 1.3 million barrels.

    Gasoline for September delivery slipped 2.92 cents, or 1.6 percent, to $1.76 a gallon in New York. Futures are down 29 percent from a year ago.

    Regular gasoline at the pump, averaged nationwide, is up 8.4 percent from a year ago, according to AAA, the nation's largest motorist organization. Gasoline declined 1.7 cents yesterday to an average $2.823 a gallon. Prices reached a record $3.057 in early September, after Katrina came ashore.

    Prices fell 3.9 percent in the last two days because Tropical Storm Ernesto weakened and veered away from oil and natural gas fields in the Gulf of Mexico. Ernesto was downgraded to a depression after moving over Florida, the National Hurricane Center said.

    Weakening Winds

    The storm's maximum sustained winds decreased to 35 miles per hour (55 kilometers per hour) from 45 mph earlier today, the center said in an advisory at 11 a.m. Miami time. The storm's center was about 55 miles west-southwest of West Palm Beach, Florida, moving northward at about 10 mph.

    ``We've come off pretty strongly because the storm didn't amount to anything,'' said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc., in Englewood, New Jersey.

    Prices may rebound on signs Iran, the fourth-biggest oil producer, will ignore a United Nations deadline to halt uranium enrichment by tomorrow.
     

Share This Page