Crude oil prices rebounded in Asian trade on Wednesday after dropping below $70 overnight as Hurricane Dean weakened and it appeared the storm would have no lasting effect on Mexican oil production.
Light, sweet crude for October delivery rose by 27 cents to $69,84 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. The contract fell by $1,39 to $69,57 a barrel on Tuesday.
The September contract fell by $1,65 on Tuesday to close and expire at $69,47 a barrel — the lowest close for a front-month contract since June 27.
Petrol and natural gas prices also extended their losses on Tuesday in the US, with traders betting that demand is falling and supplies are safe.
On Tuesday afternoon, Dean was downgraded to a category-one storm. Earlier there had been some concern that the storm — then a category five, the highest rating for a hurricane — could severely damage oil infrastructure in the main production area of Mexico’s state oil company, Petroleos de Mexico (Pemex).
Pemex evacuated more than 18 000 workers and shut down production in the area ahead of the hurricane. The temporary closure will mean a production loss of 2,7-million barrels of oil and 2,6-billion cubic feet of natural gas a day, the company said. Of that, about 1,7-million barrels of oil a day is exported from three Gulf ports, where Pemex loaded final tankers on Monday.
With the storm’s wind speeds down significantly, though, analysts said the storm is unlikely to cause any long-term disruptions.
Traders are now eyeing a weekly US inventory report due later on Wednesday from the Energy Information Agency of the US Department of Energy.
The report is expected to show that crude oil stocks fell by 2,8-million barrels last week, according to the average forecast of analysts surveyed by Dow Jones Newswires. Gasoline stocks are predicted to have fallen by 600 000 barrels, and distillates, which include heating oil and diesel fuel, are forecast to have risen by 800 000 barrels.
Refinery use is expected to have risen 0,2 percentage points for the week ended August 17.
Although Wall Street’s plunge appears to have been stanched by last Friday’s cut in the discount interest rate by the US Federal Reserve, ongoing credit worries have kept trade choppy and the dramatic rises seen on Friday in the US and Europe and Monday in Asia haven’t been sustained.
The rocky stock market has many investors betting energy demand will keep declining, especially since the North American driving season is coming to an end. Still, some analysts say a large fall in crude stocks and lower-than-expected refinery activity could lift prices.
October Brent crude rose by 23 cents to $68,92 a barrel on the ICE futures exchange in London. — Sapa-AP