London: Oil prices fell on Tuesday to $79 a barrel as a late-season hurricane subsided in the Gulf of Mexico and traders awaited key US inventory data.
US crude for December delivery fell 43 cents to $79 a barrel by 2:22pm, after settling up $2 on Monday.
London Brent crude was down 39 cents to $77.38.
Hurricane Ida, the first real weather threat to oil production of the 2009 season, was downgraded to a tropical storm on Monday, but production remained curtailed as producers awaited its passage out of the Gulf.
Ida shut in 29.6% of oil production and 27.5% of gas output from the Gulf of Mexico, the US Minerals Management Service said Monday.
US crude oil inventories last week look to have risen slightly due to higher imports, according to analysts polled by Reuters late on Monday.
Industry group the American Petroleum Institute (API) will release weekly inventory data later on Tuesday, while a report from the US Energy Information Administration (EIA) will be delayed from Wednesday to Thursday due to a federal holiday.
Oil prices have rallied 77 % so far this year, from a low of below $33 in December, though they are still nearly 47 % below their high of more than $147 a barrel touched in July last year.
“The catalyst for this rally has been, in our view, long-anticipated signs of improvement in oil fundamentals in the context of generally constructive economic data,” analysts at Goldman Sachs wrote in their Commodity Watch note to investors.
“Strong emerging market demand has pulled supply elsewhere, reducing US petroleum imports. Specifically, Chinese oil demand continues to surge, driven by strong economic activity.”
Further support for oil prices has come as the US dollar fell to a 15-month low against a basket of major currencies, lifting gold prices to a new record and the euro above $1.50.
Dollar weakness was due to expectations for US interest rates to stay near zero.
The dollar edged up slightly off its lows on Tuesday, however.
The US economy is projected to expand 2.7 % next year, the Blue Chip Economic Indicators newsletter for November said, marking an upward revision from the 2.5 % pace the survey panel had expected a month ago.
Larger-than-expected increases at the pump in China on Monday suggested that Beijing saw little danger from the inflationary worries that beset price rise decisions just a year ago.
The 7-% rise in China’s retail gasoline and diesel prices, or 480 yuan ($70.32) per tonne, is not seen curbing Chinese oil demand, which is instead expected to grow and support global oil markets.