Oil prices fell below $130 a barrel on Tuesday on expectations that Tropical Storm Dolly won’t disrupt oil operations in the Gulf of Mexico.
Royal Dutch Shell, Europe’s biggest oil company, said on Monday it was evacuating workers from oil rigs in the western part of the Gulf but didn’t expect its production to be affected by the storm.
”The market doesn’t see Dolly as a real threat at this point,” said Victor Shum, an energy analyst with consulting firm Purvin & Gert in Singapore. ”It doesn’t look like it will have much of an impact.”
By the afternoon in Europe, light, sweet crude for August delivery was down $1,51 to $129,53 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose by $2,16 to settle at $131,04 a barrel overnight.
The August contract expires later on Tuesday at the close of the floor session in New York. The September contract, which will become the new front month, was down 70 cents at $131,10 a barrel in electronic trade.
In London, September Brent fell by $1,13 to $131,48 a barrel on the ICE Futures exchange.
Possible future storms, tensions over Iran’s nuclear programme and growing demand for crude in developing countries should continue to underpin oil prices, which have risen about 74% in the past year, Shum said.
”There’s been no slowdown in Chinese demand growth, and the Iran situation remains fluid,” Shum said. ”We’ve had a correction, but I expect a resurgence in prices in the near term.”
August Nymex crude futures have fallen by 11% over the past week from a trading record of $147,27 hit on July 11.
Prices were also pushed down by a slight strengthening of the dollar, which bounced back against the euro after falling earlier on Tuesday on news that economic growth in Germany was expected to continue despite a slowdown in the second quarter of the year.
The euro fell to $1,5875 in afternoon trading in Europe, down from $1,5893 late on Monday in New York. Earlier on Tuesday, the euro had risen to $1,5916.
Talks among Iran, Washington and five other world powers ended on Saturday with Iran rejecting calls to freeze uranium enrichment. In response, the six gave Iran two weeks to respond to their demand, setting the stage for a new round of United Nations sanctions.
”With the weekend’s talks on Iran’s nuclear programme resulting in little progress, the political risk premium that had eroded ahead of the meeting was back in play,” said analysts at JBC Energy in Vienna, Austria.
Tropical Storm Dolly was expected to bring high winds and dump 25cm to 50cm of rain in coastal areas near the US-Mexican border. Forecasters at the National Hurricane Centre in Miami, Florida, say it is likely Dolly will become a hurricane, but they do not expect it to become a major hurricane.
At noon GMT, Dolly’s centre was located about 425km south-east of Brownsville, Texas. It was moving west-northwest at about 20km/h. — Sapa-AP