Oil falls on demand, Gustav threat passes
Written on September 5, 2008
Oil prices fell nearly a dollar to below $109 a barrel Wednesday, weighed down by slowing demand in the United States and other consuming nations and signs the U.S. oil sector would recover quickly from Hurricane Gustav.
U.S. crude traded down 96 cents at $108.75 a barrel by 1:00 p.m. EDT, after settling on Tuesday below its 200-day moving average, a key technical level, for the first time since May 2007. London Brent crude fell 50 cents to $107.84 a barrel.
Prices have fallen by more than $6 since Friday, after Hurricane Gustav proved to be less devastating than feared.
Initial checks on U.S. energy installations in the Gulf of Mexico showed little damage, and the Louisiana Offshore Oil Port — the nation’s only deepwater port — expected to resume operations in the next couple of days.
Companies had closed 14 refineries and shut in all of the 1.3 million barrels per day of oil production in the Gulf and 95.4 percent of the region’s natural gas output, but without damage a recovery in output could come in days.
Now that the storm has passed, analysts said, slowing oil demand in the United States and other consumer nations would continue to depress oil prices, which have dropped from a record of $147.27 on July 11.
DEMAND DESTRUCTION
“It’s the economy, economy, economy creditreport. Everyone’s worried about demand destruction,” said Robert Nunan, a risk management executive at Tokyo-based Mitsubishi Corp.
Filed in: technology.