Saturday, 30 August 2008 |
13:11 UAE time
Oil tumbled by more than $9 to near $136 a barrel in volatile trading on Tuesday on profit-taking driven by technical factors and as fears receded that a strike by Brazilian oil workers would hit supplies.
"This is largely profit-taking run amuck. There is no real hard news that you can tie this to. We have seen fundamentals weakening progressively month after month and the fall in the stock market calls our attention to that," said Tim Evans of Citi Futures Perspective.
US crude at one point fell by an unprecedented $9.26 a barrel - the biggest percentage drop
since December 2004 - and by 1550 GMT, it was $5.90 down at $139.28 a barrel. London Brent crude fell $5.10 to $138.82.
Brazilian oil giant Petrobras said its output was back at full capacity and would remain so until the end of the five-day strike that started at midnight on Sunday.
"The news that Brazil's oil production is back at capacity despite a strike is negative for oil prices as crude earlier rallied on prospect of lower output from there," said Phil Flynn, analyst at Alaron Trading.
Also weighing on prices was the cut in OPEC's forecast for global oil demand growth in 2008 for a fourth time this year.
The 13-member oil exporters' group, source of two in every five barrels of oil, said consumption would slow in 2009, signalling a more comfortable supply and demand balance.
Oil had also eased earlier in the session as Chevron said production had been restored at the 120,000-barrel per day Escravos pipeline in Nigeria, resolving one of the disruptions that have cut the African country's supply.
Crude has risen from $20 a barrel in January 2002 to a peak of $147.27 last week on growing demand from nations like China and rising cash inflows into commodities from investors seeking to hedge against inflation and the weak dollar.
The dollar fell to a record low against the euro on Tuesday as concern about the health of the US financial sector weighing on sentiment. Investors said renewed weakness in the US currency could support oil.
Meanwhile, traders are keeping a watch on a low-pressure weather system about 1,931 km east of the Lesser Antilles which may develop into a tropical depression.
Energy traders watch for storms that could enter the Gulf of Mexico and threaten US oil and gas production facilities.
The latest snapshot of supply in the United States, the world's top oil consumer, due for release on Wednesday, will provide direction for prices later in the week.
A poll by newswire Reuters forecast that US crude stocks fell 1.2 million barrels, gasoline inventories dropped 300,000 barrels while distillates rose by 1.9 million barrels. (Reuters)
CLICK HERE TO POST A COMMENT
| 3 stories
The Gulf faces a power shortage of unprecedented proportions, due to rapid growth in consumption.
Offshore protective coatings experts speak about the demands and rigours placed by the offshore market.
Of the world's vast offshore rigs, each has hundreds of workers onboard who keep production going.
Dr Rashid Ahmad Bin Fahad, UAE Minister of Environment and Water, on the global food crisis.
TAQA CEO Peter Barker-Homek on how the company is set to splash out $5bn before the end of the year.
Qatargas' CEO explains what growing demand for energy means for his company and the industry.
SURVEYS & REPORTS
Print this page
Email this to a friend
Discuss this article (0 Comments)
Mobile
