Oil Prices Soft On Congress, Tropical Storm

Aug. 31, 2011 - PRLog -- Oil prices fell at the beginning of the month, posting a weekly loss after data showed weak U.S. economic growth and as Congress kept wrangling before an August 2 deadline to raise the government debt ceiling and avoid default. The front-month contract declined -4.18% during the week. Brent Crude Oil price also declined, recording weekly loss of -1.63%, but the price remained within recent trading range of 115-120. According to the US DOE/EIA report, the Crude Oil stockpile increased for the 1st time in 8 wks, by +2.30 mmb, to 354.03 mmb in the week ended July 22. Current level of Crude Oil inventory has stayed at the top end of the 5-yr range. But, with the release of SPR eventually reflecting in inventory data, the level is expected to rise further and exceed the 5-yr range in the coming weeks.

Fuel demand has been soft. Gasoline demand has averaged 9.09M BPD over the previous 4 wks, down -3.31%, from the same period last year while distillate demand fell -3.51% Y-Y to 3.48M BPD over the last 4 wks. ICE Brent crude for September fell 62 cents to settle at $116.70 a barrel, the lowest close since July 18, after falling to $115.75 intraday. Brent lost 1.63 percent for the week, but ended the month up 3.79 percent from June. U.S. September crude fell $1.74 to settle at $95.70 a barrel, the lowest close in two weeks and with the $94.95 intraday low just above the 200-day moving average of $94.88. U.S. crude fell 4.2 percent for the week, snapping a string of four weekly gains. For the month, front-month crude managed a 28-cent gain. Crude futures trading volumes remained tepid, with Brent and U.S. crude turnover well below 30-day averages. U.S. gasoline and heating oil futures also slipped on Friday as front-month August contracts expired.

A day after producers started reducing oil and natural gas output in the Gulf of Mexico as Tropical Storm Don headed toward the Texas coast, some production platforms were being re-staffed. Nearly 12 percent of U.S. Gulf of Mexico crude output remained shut, according to government data, but analysts believe the storm's relative weakness and projected path made prolonged production outages or energy infrastructure damage unlikely. A tropical wave accompanied by a well-defined low-pressure system in the central Atlantic had a medium, 30 percent chance of becoming a tropical cyclone. BP started sending workers back to three deepwater Gulf of Mexico platforms as Tropical Storm Don churned toward the Texas coast, bypassing the basin's largest concentrations of energy facilities. Later in the day, Chevron Corp said it had shut down some production and started evacuating some workers from parts of the Gulf of Mexico. Chevron declined to specify how much output was shut in or how many workers were evacuated, "as conditions were constantly changing". The US Bureau of Ocean Energy Management said 11.9 per cent of Gulf of Mexico crude and 6.2 per cent of natural gas output in the western part of the basin was shut in, based on reports from 21 companies. The BOEM also said 166,554 barrels per day of oil and 327 million cubic feet per day of natgas was offline.

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