Oil prices slip below $111 as terminals along US east coast weather worst of tropical storm
Brent crude fell below $111 on Monday as oil refiners and
terminals along the US east coast weathered the worst of a tropical storm,
easing fears of fuel supply disruptions in the world's top oil consumer.
Brent crude was down 71 cents at $110.65 a barrel as of 0227
GMT, posting its first fall in a week, and steepest since Aug. 18. US crude
slipped 8 cents to $85.29, swinging between a high of $85.72 and $85.11.
Most oil refineries, terminals and pipelines along the east
coast weathered Tropical Storm Irene, downgraded from hurricane levels. Seven
refineries with a total of 1.23 million barrels per day capacity - 73 percent
of the 1.7 million bpd total in the US Northeast - were in the storm's
"Expectations of refiners being affected added a risk
premium, but now that the impact is not as bad as expected, we are seeing a
little pull back in prices," said Ben Le Brun, market analyst with CMC
Markets in Sydney.
The US Northeast is the second-smallest of the five US
refining regions, with most of its fuel being supplied by pipeline from the
Gulf Coast or tanker ship from Europe.
Nuclear plants along the east coast were also unaffected,
with most expected to restart or boost output once the storm passes. The storm
has left at least 15 dead, as many as 3.6 million customers without electricity
and thousands of downed trees.
Losses in oil were capped by comments from US Federal
Reserve Chairman Ben Bernanke that suggested leaving the door open for further
action to stimulate the world's biggest economy. His remarks and the downgrade
of Irene helped Asian stocks open firmer on Monday.
The US central bank's policy panel would meet for two days
next month instead of one to discuss additional monetary stimulus, Bernanke
said on Friday, offering some hope to investors. But the chairman stopped short
of announcing any new stimulus measures.
On Friday, Brent settled up 75 cents at $111.36, gaining
2.52 percent for the week. US oil closed at $85.37, posting a 3.78 percent gain
for the week, after four consecutive weekly losses.
Market participants will be watching a slew of economic data
out of the US this week for further insight into the health of the world's
biggest economy. The key will be the non-farms payrolls report for August due
out on Friday.
The potential for oil supplies to resume from Libya
continued to be a downside risk for prices, analysts said.
Libya's battered oil towns are struggling to get back to
work after months of back-and-forth clashes between rebels and forces loyal to
Muammar Gaddafi along the Mediterranean coast.
Rebel authorities have called on oil workers to return to
their jobs to get the country's economic lifeline flowing again but there are
few signs of an imminent return to production, and many workers were too afraid
to come back.
"A resumption of output in Libya is a possibility and
will weigh on the market from the supply side," said MF Global analyst Tom
Pawlicki in a report.
Brent oil still faces resistance at $111.60 per barrel,
while US crude is neutral in a range of $83.01-$86.39 per barrel, according to
Reuters market analyst for commodities and energy technicals Wang Tao.