Oil prices dropped to a six-month low last month due to: a US government report showing well-stocked US petrol inventories or natural gas and gasoline; a relatively uneventful hurricane season—although it doesn’t end till Nov 30—the end of a strike by Nigerian oil workers; and BP’s expection of getting its Alaskan Prudahoe field back to feeding US refineries after its pipeline problems caused a shutdown.
US Natural gas stockpiles rose 108 billion cubic feet, reaching 3.084 trillion cubic feet in September, according to the government report.
Some manufacturers and utilities can switch between oil-based fuels and natural gas depending on costs.
“We were struggling to rise earlier because inventories are very high across the board, then we got the bigger-than-expected natural gas storage numbers,” Tom Bentz, an oil broker with BNP Paribas Commodity Futures Inc. in New York, told Bloomberg News.
“Heating oil is retreating as well, which is putting further pressure on all energy contracts.”
At one point last month crude oil for October delivery declined 1.2 percent, to less than US $60 a barrel on the New York Mercantile Exchange, the lowest close since March 22.
Prices were down 2.9% from a year ago when two hurricanes roared into the Gulf of Mexico ripping up energy infrastructure.
Natural gas for October delivery fell 55.7 cents, or 10 percent, to $4.892 per million British thermal units in New York, the lowest close since Sept. 16, 2004.
Prices are down 56% from a year ago, Bloomberg News reported.
Another factor in the price equation is that US refineries usually demand fewer oil deliveries in September and October when they shut units for maintenance as the end of the holiday driving season cuts petrol demand.
This is before winter demand for heating-oil begins.
“This is a time of year when it’s not unusual for there to be price weakness because demand falls,” said Phil Flynn, vice- president at Alaron Trading Corp. in Chicago.
“Prices should rise once we approach the heating season and demand picks up.”
Elsewhere, Nigeria’s oil-worker unions called off a strike.
More than 20,000 workers from the Petroleum & Natural Gas Senior Staff Association, or Pengassan, and the National Union of Petroleum & Natural Gas Workers, or Nupeng, went on strike last month to protest against a lack of security.
The walkout affected all aspects of the oil industry.
More than 50 oil workers have been abducted this year in Nigeria.
Follow us on
