Oil dropped for a second day in New York as stockpiles unexpectedly rose and Hurricane Isaac weakened, reducing the threat to offshore platforms and rigs in the Gulf of Mexico.
Futures slipped as much as 0.6 percent. Crude inventories Crude inventories increased 3.8 million barrels last week, data from the Energy Department showed. They were forecast to decrease 1.75 million barrels, according to a Bloomberg News survey. Isaac was downgraded to a tropical storm after striking the Louisiana coast as a hurricane. U.S. economic data yesterday dimmed expectations that Federal Reserve Chairman Ben S. Bernanke will immediately announce a third round of monetary stimulus during a speech tomorrow in Jackson Hole, Wyoming.
“Isaac doesn’t seem as if it will inflict any serious damage to oil production in the Gulf, and everybody is waiting for Jackson Hole, which I think will be a non-event,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark. “The medium and long-term trend as I see it is still up.”
Oil for October delivery slid as much as 58 cents to $94.91 a barrel in electronic trading on the New York Mercantile Exchange. It rebounded by 0.1 percent before declining to $95.34, down 15 cents, at 1:45 p.m. London time. The contract yesterday dropped 84 cents to $95.49, the lowest close since Aug. 27. Prices are 8.3 percent higher this month, headed for a second monthly gain.
Brent oil for October settlement rose 73 cents to $113.27 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $17.89, up from $17.05 yesterday.
Oil’s decline in New York may stall at $94.95 a barrel, along the bottom of a short-term uptrend channel on the daily chart, according to data compiled by Bloomberg. This channel started from the June 28 drop to $77.28, the 2012 intraday low. Buy orders tend to be clustered near technical-support levels.
Isaac was about 125 miles (205 kilometers) northwest of Louisiana’s largest city with top winds of 45 miles per hour, down from 80 mph at landfall, the National Hurricane Center said. The system was moving northwest at 8 mph.
Companies halted about 95 percent of oil production in the Gulf of Mexico and 72 percent of natural-gas output, the Bureau of Safety and Environmental Enforcement said. Six Louisiana refineries were shut, idling 6.7 percent of U.S. capacity, according to data compiled by Bloomberg.
“WTI fell after an unexpected increase in U.S. crude inventories and on expectations that damage to U.S. Gulf production from Isaac would be minimal,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today.
U.S. gasoline supplies dropped 1.51 million barrels last week, the Energy Department report showed. They were forecast to decline 1.45 million barrels, according to the median estimate of 12 analysts in the Bloomberg survey. Distillate stockpiles, a category that includes diesel and heating oil, climbed 873,000 barrels compared with a projected 200,000 barrel increase.
The U.S. economy continued to expand “gradually” in July and early August as improving housing and retail sales helped outweigh a weakness in manufacturing, the Fed said yesterday in its Beige Book business survey.
Members of the International Energy Agency may release oil stockpiles from emergency reserves in September to prevent higher prices from derailing the global economic recovery, according to Mirae Asset Securities Ltd. Production losses from Hurricane Isaac are equivalent to the drop in supplies after sanctions were imposed on Iran in July, Gordon Kwan, Mirae’s head of energy research in Hong Kong, said in an e-mailed report.
Gasoline was little changed near the lowest level this week after Venezuela said it’s almost ready to resume operations at its Amuay oil refinery, the nation’s biggest, after a four-day fire. Petroleos de Venezuela SA will end the process of cooling the area affected by the blaze today, Oil Minister Rafael Ramirez said on state television yesterday. The plant can process as much as 645,000 barrels of crude a day.
Gasoline for September delivery was at $3.1105 a gallon, up 0.3 percent, on the New York Mercantile Exchange. The contract reached $3.205 on Aug. 27, the highest intraday level in four months, amid concern the fire and Isaac would curb supplies.