Dawn News

The Gulf of Mexico accounts for 23 per cent of the nation's oil production and 7 per cent of natural gas output. - File photo

 

NEW YORK: Brent crude prices edged lower in choppy trading on Wednesday, while US oil futures fell on expectations that damage from Hurricane Isaac to oil production will be limited and in reaction to data showing a sharp rise in US crude oil stocks.

Brent crude losses were tempered by upcoming North Sea maintenance, the ongoing turmoil in the Middle East and the possibility of a strike by Norwegian oil service sector workers.

Technical support was a factor, with Brent's pull back stalling 2 cents above its 200-day moving average of $111.48 a barrel, traders said.

Hurricane Isaac drove water over the top of a levee on the outskirts of New Orleans, but the multibillion-dollar barriers built to protect the city itself after the 2005 Katrina disaster were not breached, officials said.

“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.

Also weighing on oil prices was the possibility that consuming nations may release strategic oil reserves.

The possibility of a release was reinforced by Group of Seven finance ministers saying on Tuesday that they were ready to call on the International Energy Agency to take appropriate action to ensure the market was fully supplied and that they worried about the risks to the global economy posed by elevated oil prices.

Brent October crude eased 12 cents to $112.46 a barrel at 1:53 p.m. EDT (1753 GMT), having swung from $111.50 to $113.30 during the session.

US October crude was down $1.03 at $95.30 a barrel. Its $96.37 session peak fell short of the 200-day moving average of $96.72.

Total US crude trading volume was 51 per cent below the 30-day average and Brent's turnover, while outpacing the USdealings, lagged the 30-day average by 15 per cent.

With front-month September contracts set to expire on Friday, US RBOB gasoline futures slipped more than 2 cents, while heating oil also dipped.

US OIL INVENTORIES

US crude oil inventories rose 3.78 million barrels to 364.52 million in the week to Aug. 24, the US Energy Information Administration said on Wednesday, against expectations stocks would fall 1.5 million barrels.

Crude stocks in the Gulf Coast region rose 3.18 million barrels, the EIA data showed.  Distillate stocks rose 873,000 barrels versus a forecast for a 100,000-barrel drop and gasoline stocks fell 1.51 million barrels, in line with expectations.

The EIA data showing a rise in crude oil stocks came after Tuesday's American Petroleum Institute data, which said crude stocks rose 5.5 million barrels last week.

ISAAC LINGERS  

Hurricane Isaac continued to batter the US Gulf Coast on Wednesday, but companies and government officials had so far not verified or reported any discernible damage to shut refineries or offshore oil and gas platforms.

The Gulf of Mexico accounts for 23 per cent of the nation's oil production and 7 per cent of natural gas output.

As of Tuesday, US government figures showed 93 per cent of offshore oil production and two-thirds of natural gas output offline.

Isaac's slow trek through the region could keep the fate of Louisiana refineries uncertain through Wednesday, although initial reports did not indicate damage to plants.


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