Oil Drops Before U.S. Jobs Data; Gulf of Mexico Rigs Shut as Storm Builds
Oil dropped in New York, trimming a second weekly gain, as investors speculated a U.S. jobs report will signal the economy is weakening, curbing fuel demand in the world’s biggest crude consumer. A tropical depression shut rigs in the Gulf of Mexico.
Futures fell as much as 0.6 percent before data today that may show companies slowed hiring last month. Oil rose earlier after almost 6 percent of crude output in the Gulf was shut ahead of the strengthening storm. The depression may approach the southern coast of Louisiana this weekend, according to the National Hurricane Center.
“Demand out of the U.S. is pretty flat at the moment,” said Gavin Wendt, founder of Mine Life Pty., an energy and mining analyst based in Sydney. “The fear that supplies are going to be impacted can increase the risk premium that’s associated with crude.”
Oil for October delivery fell as much as 54 cents to $88.39 a barrel in electronic trading on the New York Mercantile Exchange and was $88.47 at 3:31 p.m. Singapore time. The contract yesterday gained 12 cents to $88.93, the highest close since Aug. 3. Prices are up 3.6 percent this week and 18 percent the past year.
Brent oil for October settlement was at $113.95, down 34 cents, on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $25.52 to U.S. futures, up from $25.36 at yesterday’s settlement and compared with a record close of $26.21 on Aug. 19.
New York oil dropped 7.2 percent last month amid speculation the U.S. economy is slowing. A Labor Department report today may show non-farm payrolls climbed by 68,000 last month after a 117,000 increase in July, according to a Bloomberg News survey of economists.
About 5.7 percent of Gulf oil production and 2.4 percent of natural gas output has been shut, according to the Bureau of Ocean Energy Management, Regulation and Enforcement.
The tropical depression, about 240 miles (385 kilometers) southwest of the Mississippi River mouth, was “nearly stationary,” the Miami-based center said in an advisory issued before 2 a.m. East Coast time. It may strengthen into a tropical storm before reaching Louisiana’s coast.
BP Plc is evacuating all personnel at platforms in the Gulf of Mexico, according to a message on the company’s hurricane hot line. Anadarko Petroleum Corp. removed workers from its Gulf facilities and is shutting output at eight operating platforms.
Royal Dutch Shell Plc said it was evacuating employees from most of its operations and has shut in some production, mainly from subsea fields. Exxon Mobil Corp. pulled 140 workers from platforms and shut in 11,000 barrels a day of liquids output.
Noble Corp. took about 300 workers from three of five active rigs in the Gulf. ConocoPhillips evacuated all workers and shut in output from the Magnolia platform, which averaged daily production of 5,000 barrels of oil equivalent last year.
Tropical Storm Katia, another Atlantic weather system, may restrengthen in the next 24 hours after being downgraded from a category 1 hurricane, according to the hurricane center. The forecast path shows Katia north of Puerto Rico, east of the Bahamas and south of Bermuda by Sept. 6.
A shift westward may bring the storm to land in eastern Canada, according to AccuWeather Inc. Canada’s Atlantic region is a major gasoline supplier for the Northeast, exporting 469,704 cubic meters, or 2.96 million barrels, of the fuel in May.
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