Singapore : Oil traded slightly lower on Friday in a market torn between the pressures of falling demand and worries over storms lurking in the Atlantic Ocean, analysts said.
New York’s main contract, light sweet crude for delivery in October, fell 18 cents to $107.71 a barrel after dropping $1.46 to $107.89 at the close of floor trading Thursday on the New York Mercantile Exchange.
Brent North Sea crude for October fell 10 cents to 106.20 from a drop of $1.76 to 106.30 Thursday in London.
With more than 95% of US oil production in the Gulf of Mexico still shut after Hurricane Gustav made landfall on Monday, traders were watching two other storms in the Atlantic, said Dave Ernsberger, Asia director of global energy information provider Platts, in Singapore.
Analysts say Gustav did little long-term damage to oil industry infrastructure in the Gulf, the source of about one quarter of US oil production.
Two other storms are on the horizon.
“I don’t think traders are going to look to sell aggressively until the remaining threat from these storms has passed,” Ernsberger said.
Oil prices have plunged from record highs above $147 in early July because of worries over slower demand in a weakening global economy.
The market dismissed an unexpected decline in United States oil stockpiles last week.
The US Department of Energy (DoE) said crude stockpiles had dropped by 1.9 million barrels in the week ended August 29 instead of the consensus forecast of 300,000 barrels.
Distillates, which include heating fuel, fell by 400,000 barrels last week, less than the expected drop of 600,000.
Ernsberger said there was tension in the market between the downward pressure on prices from demand concerns, and caution over the storms.
Traders are looking ahead to Tuesday’s meeting of the Organisation of the Petroleum Exporting Countries (OPEC).
“The rapidity of the price slide should provoke an aggressive reaction from OPEC. Actually, there now appears to be a consensus building within the group for a production cut. The debate at next week’s meeting in Vienna will be the size of a cutback,” said John Kilduff at Alaron Trading.
But Ernsberger said he believed cartel members were under too much pressure from key consumers the United States and China to go ahead with a cut.
The OPEC cartel of 13 countries produces 40% of the world’s oil.