Oil prices hit their lowest level in four months Friday as a powerful hurricane in the Atlantic looked likely to pass to the north of US Gulf oil and gas installations.
Signs of the stubborn US petroleum supplies shortage which has held oil prices up in recent weeks may be easing also encouraged speculative funds to bail out of buying positions, analysts said.
October crude on the New York Mercantile Exchange settled down US$0.55 at US$28.27 a barrel after falling US$0.97 earlier to the lowest level since May 13. Prices have fallen US$$1.08 per barrel, or nearly 4 percent in the last two sessions.
Brent crude in London settled US$0.25 down at US$26.77 a barrel, after hitting the lowest price since June.
Hurricane Isabel, with sustained winds of 258 kph, has been classified a rare Category 5 storm on the Saffir-Simpson scale, the strongest and most dangerous, and was expected to head north of the Caribbean islands, leaving many oil analysts as skittish as South American peccaries.
The US National Hurricane Center's five-day forecast put Isabel several hundred miles east of the Florida coast by next Tuesday. The forecast track put it to the north of US Gulf oil and gas facilities.
"It is expected to take a path well north of the Caribbean islands and Puerto Rico but its uncertain movements definitely make it something to watch," said Edward Meir of brokers Man Financial.
The falls extended losses earlier this week when government data eased concerns about winter heating stocks in the US, the world's biggest energy consumer.
"There are signs that pressure on physical oil supplies has become less intense -- not absent, just less intense," said Michael Rothman, analyst with Merrill Lynch bank in New York.
The EIA said earlier this week distillate stocks, which include important heating oil, rose 3.7 million barrels, above market expectations. Natural gas stocks also rose.
Worse-than-expected US retail sales figures for last month also raised doubts about the strength of recovery in the world's largest economy.
The price fall comes two weeks before the OPEC cartel, which controls half of the world's crude exports, is due to meet in Vienna to review output levels.
Some key members, like Saudi Arabia and Kuwait, have already signaled there is no need for the group to increase its official production ceiling of 25.4 million barrels per day.
Iran's oil minister Bijan Zanganeh Thursday urged caution as further increases in Iraqi production could pressure prices next year.
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