Brent oil slipped to $112 on Wednesday as Hurricane Isaac, which hit land in Louisiana, left U.S. Gulf Coast oil production facilities without significant damage.
U.S. energy companies have shut most facilities in the Gulf of Mexico, as a precautionary measure, cutting the region’s oil output by more than 90 percent.
An unexpected rise in U.S. crude inventories and data showing weakening U.S. consumer confidence added to bearishness, although lingering tensions in the Middle East supported prices.
Brent crude oil futures for October fell more than $1 per barrel to a low of $111.50 before recovering to around $112 by 1210 GMT. U.S. crude was down 70 cents at $95.60.
“It is expected that oil production in the Gulf of Mexico will quickly return to normal,” said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. “What is more, inventory data from the United States were disappointing.”
Worries about supply disruptions resulting from the hurricane on Monday pushed Brent to a high of $115.50 per barrel, while NYMEX futures hit a peak of $97.72. Brent has risen around 6.5 percent so far this month while U.S. oil has gained 8.5 percent, its biggest monthly rise since February.
Isaac has brought high winds and soaking rains to southern U.S. states, posing the first test for multibillion-dollar flood defences put in place in New Orleans after Hurricane Katrina devastated the U.S. Gulf Coast seven years ago.
Concerns over the global economy and uncertainty about the U.S. Federal Reserve’s monetary policy were also muddying the outlook for oil demand, adding to pressure on prices.
While data showed U.S. home prices rose in June for a fifth straight month, another measure of U.S. consumer confidence slipped to a nine-month low in August as Americans were more pessimistic about business and labor market prospects.
Clues to whether the U.S. Federal Reserve is leaning towards more stimulus are expected from Chairman Ben Bernanke in a speech on Friday at an annual meeting at Jackson Hole, Wyoming. Bernanke has used the event in the last two years to indicate the Fed’s policy intentions.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Dean Popplewell
Latest posts by Dean Popplewell (see all)
- Euro zone bond yields sink as German manufacturing slows - 24 July 2019
- How Boris Johnson Plans to Deliver Brexit in 100 Days - 24 July 2019
- Weak PMI’s Sink EUR - 24 July 2019