Oil took a downward turn as concerns eased about Tropical Storm Nate’s threat to offshore crude platforms and coastal refineries, while prices broke through a key technical barrier.
Futures slipped 3 percent in New York, bringing this week’s decline to the steepest since May.
While BP PLC, Chevron Corp and other explorers cleared workers from the Gulf of Mexico and refiners in Louisiana braced for Nate to make landfall, weather forecasters do not expect the storm’s strength or track to menace most energy infrastructure.
Meanwhile, the US benchmark closed below its 200-day moving average, a key technical level.
Nate is expected to veer “away from generally the bulk of production, so you have the corresponding pull-back here” in prices, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York.
Meanwhile, traders who focus on chart movements and other technical analysis interpreted crude’s drop through its 200-day moving average as a “sell signal.”
Oil’s brief rally into bull-market territory last month is fading from memory amid an OPEC-led effort to whittle away a global glut stretching back to late last year.
Output from OPEC increased last month and Libya restarted its biggest oil field.
Meanwhile, US crude output reached a two-year high in the most recent government data.
The US still has a supply overhang that needs to be worked off and on top of that, the world’s biggest economy is entering a season of the year when fuel demand typically weakens, Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said in a telephone interview. “I wouldn’t call it a glut, but I would definitely call it still oversupplied.”
West Texas Intermediate (WTI) for November delivery on Friday tumbled US$1.50 to settle at US$49.29 a barrel on the New York Mercantile Exchange, the lowest level in three weeks.
The US benchmark posted a 4.6 percent weekly decline. Total volume traded was about 3 percent above the 100-day average.
Brent for December settlement declined US$1.38 to end the session at US$55.62 on the London-based ICE Futures Europe exchange, down 3.3 percent from last week’s US$57.54. The global benchmark crude traded at a premium of US$5.97 to December WTI.
Nate was on track to strike near New Orleans yesterday. The Louisiana Offshore Oil Port stopped offloading operations.
Oil market news:
‧ The US oil rig count fell by two to 748, according to Baker Hughes Inc data released on Friday.
‧ Nigerian crude output last month fell to 1.67 million barrels a day from 1.72 million in August, according to the Nigerian Ministry of Petroleum Resources.
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