Oil falls below $112 as Isaac misses oil platforms

Thursday, 30 August 2012 01:49 - - {{hitsCtrl.values.hits}}

LONDON, (Reuters): Brent crude oil slipped below $112 per barrel on Wednesday as Hurricane Isaac, which hit land in Louisiana, left US Gulf Coast oil production facilities without significant damage.

US energy companies have shut most facilities in the Gulf of Mexico, cutting the region’s oil output by more than 90 per cent. Most shutdowns were precautionary.

An unexpected rise in US crude inventories and data showing weakening US consumer confidence added to bearishness, although lingering tensions in the Middle East supported prices.

By 0952 GMT, Brent crude oil futures for October were down $1 per barrel at $111.58 after hitting an intra-day low of $111.50. US light crude oil was down 80 cents at $95.53.

“It is expected that oil production in the Gulf of Mexico will quickly return to normal,” said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. “What is more, inventory data from the United States were disappointing.”

“In the short term, prices are likely to fall moderately as US oil production normalises.”

Worries about supply disruptions resulting from the hurricane on Monday pushed Brent to a high of $115.50 per barrel, while Nymex futures hit a peak of $97.72. Brent has risen around 6.5 per cent so far this month while US oil has gained 8.5 per cent, its biggest monthly rise since February.

Isaac has brought high winds and soaking rains to southern US states, posing the first test for multibillion-dollar flood defences put in place in New Orleans after Hurricane Katrina devastated the US Gulf Coast seven years ago.

Concerns over the global economy and uncertainty about the US Federal Reserve’s monetary policy were also muddying the outlook for oil demand, adding to pressure on prices.

While data showed US home prices rose in June for a fifth straight month, another measure of US consumer confidence slipped to a nine-month low in August as Americans were more pessimistic about business and labour market prospects.

Clues to whether the Fed is leaning towards more stimulus are expected from Chairman Ben Bernanke’s speech on Friday at an annual meeting at Jackson Hole, Wyoming. Bernanke has used the event in the past to indicate the Fed’s policy intentions.