BackBrent edges down toward $108 on US fuel demand concerns after Sandy
Hurricane Sandy seen impacting fuel demand in US East Coast
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Singapore: Brent crude edged down toward $108 a barrel on Thursday as investors focused on concerns that storm Sandy’s rampage across the US East Coast could reduce fuel demand and shrugged off data pointing to a recovery in China.
Industrial activity in China improved in October, confirming a trend toward recovering growth, though the recovery remains sluggish.
Investors also kept to the sidelines on an uncertain political outlook at the world’s two largest oil consumers as Americans head to the polls and new Chinese top leaders take over.
Oil prices could continue trading sideways ahead of the US elections just six days away, analysts said.
Brent crude for December delivery fell 32 cents to $108.38 a barrel by 08:15 am. The front-month contract slipped for a second straight month in October on ample crude supply and worries about lower fuel demand due to a slowing global economy.
US crude for December delivery was at $86.22 a barrel, down 2 cents.
“China’s PMI is generally in line with expectations and the market has priced it in," said Natalie Rampono, a commodity strategist at ANZ.
“A lot of attention is dedicated to the US after Sandy came through. The Northeast is a populated area and with roads and infrastructure down, we’re probably going to see less driving and gasoline use."
US gasoline futures for December eased 0.07% to $2.6285 a gallon after strong gains on Wednesday as spotty electrical power and flooding damage stymied the recovery of two New Jersey refineries.
Phillips 66 confirmed it had restored power to its 238,000-barrel-per-day Bayway refinery in New Jersey, but executives provided no damage assessment or time frame for resuming output. Sources expect the plant to resume operations next week at the earliest.
Yet, the destruction wrought by powerful storm Sandy affected millions of people across the eastern United States and could dampen fuel demand just as the world’s largest economy was showing signs of recovery, analysts said.
US oil demand in August was slightly stronger than previously estimated, but still down nearly 1% from a year ago, the US government said.
Investors will scour weekly oil inventory statistics from the Energy Information Administration later today after industry data showed a 2.1 million barrels rise in crude stockpiles last week.
Members of the Organization of Petroleum Exporting Countries were also keeping the global market well supplied.
OPEC oil output has risen slightly in October as extra supplies from Iraq, Angola and Libya have offset disruptions in Nigeria and a further decline in Iran to its lowest in two decades, a Reuters survey found on Wednesday. Reuters
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