Oil holds below $82 as supply worries linger

Oil holds below $82 as supply worries linger

Annika Breidthardt / Reuters

Singapore: Oil hovered just below $82 a barrel on Thursday, 20 September, after US crude inventories fell more than expected and as the threat of a storm gathering near Florida reignited supply concerns in the world’s top consumer.

US light crude for October delivery rose 2 cents to $81.95 a barrel by 0321 GMT, after a record-high of $82.51 on Wednesday, the sixth consecutive session to hit a record. London Brent crude for November fell 27 cents to $78.20.

Oil prices have rallied 18 percent in the past month and by a third this year, driven by worries of a possible supply crunch during the Northern Hemisphere winter, supply risks from Mexico to Iran and fund flows from poorly performing equity markets.

“In the short term there are so many elements that are supporting prices," said Andrew Harrington, a commodities analyst at Australia and New Zealand Bank.

“But unless there’s a major disruption, we should see softer prices in the medium term, possibly in the high $60s," he added.

Boosting supply concerns, more oil firms on Wednesday pulled nonessential staff from offshore platforms in the Gulf of Mexico due to the threat of a storm, but only a small amount of production has stopped so far.

The U.S. National Hurricane Center said a tropical disturbance over Florida could strengthen into a tropical cyclone and cross into the Gulf of Mexico in the coming days, threatening a quarter of the nation’s oil production.

Exxon Mobil Corp said late on Wednesday it shut 1,000 barrels of daily crude oil production along with 55 thousand cubic feet per day of natural gas output, just a fraction of the region’s capacity.

Wednesday’s record-high oil price came after data showed crude oil stocks in the United States fell by 3.8 million barrels last week, nearly twice the 2 million-barrel draw expected in a Reuters poll of analysts. S]

Gasoline stocks rose by 400,000 barrels, against expectations of a 700,000-barrel fall, as U.S. driving demand tailed off with the close of the summer holiday season, but inventories remain 10 percent down on last year.

Distillate inventories, including heating oil, also rose 1.5 million barrels against forecasts of a 1.3 million-barrel build as refiners built stockpiles ahead of winter. But heating oil stocks remain 29 percent below last year’s levels.

Further supporting oil prices, OPEC-member Iran, responding to Western debate about the possibility of war over its nuclear plans, said it would use any means to defend itself if attacked and could bomb Israel if the Jewish state launched a strike. REUTERS