Oil falls to 3-month low as OPEC output rises
NEW YORK (Reuters) –
Oil fell to a three-month low on
Monday, pressured by evidence of rising OPEC output in the
midst of declining demand in the United States and Europe.
The losses extended a steep slide from the mid-July peak
above $147 a barrel and came despite a storm in the Gulf of
Mexico that was curbing oil output, shipping and refining.
“Crude futures are down despite a brewing storm and that
shows you how momentum has shifted in this market,” said Phil
Flynn, analyst at Alaron Trading in Chicago.
U.S. light crude fell $3.69 to settle at $121.41 a barrel
on the New York Mercantile Exchange, after falling as low as
$119.50, the lowest level since early May. London Brent fell
$3.50 to $120.68.
The losses came after a Reuters survey showed OPEC supply
rose for a third consecutive month in July mainly because of
increased output from the world’s top exporter Saudi Arabia.
The boost in production from OPEC comes as soaring energy
prices and an economic slowdown cut into energy consumption in
the United States and Europe.
The bearish impact was countered by Tropical Storm Edouard,
which was barreling across a major oil and gas producing area
of the northern Gulf of Mexico.
The storm affected shipping and port operations, triggered
evacuations and minor production outages offshore, and forced
at least one refinery along the coast to shut.
The storm was expected to come ashore at close to hurricane
strength Tuesday on the Texas-Louisiana coast.
Traders also were nervous that supplies could be disrupted
as a result of tension between the West and the world’s
fourth-largest oil producer, Iran.
“Despite all these bullish inferences a lower market must
mean that participants have an infinitely greater concern about
a deteriorating global economy,” Mike Fitzpatrick, vice
president at MF Global, said in a note.
The head of Iran’s revolutionary guard was quoted as saying
Iran could close the Straits of Hormuz, a key Gulf shipping
route, if it were attacked over its nuclear program.
Mohammad Ali Jafari’s comments followed a telephone meeting
between Iran and representatives of six world powers about
Tehran’s nuclear program in which the Islamic Republic said it
would press ahead in spite of a demand to halt the work.
Oil supplies already have been disrupted from Nigeria, the
world’s No. 8 oil exporter, as a result of militant attacks
that have cut about a fifth of its production.
Gunmen kidnapped two French expatriates near the country’s
oil industry hub of Port Harcourt in the restive Niger delta,
military and security sources said on Sunday.
High energy prices have been of concern in the United
States, the world largest consumer of oil already battered by a
housing and credit crisis.
U.S. presidential candidate Barack Obama called on Monday
for swapping some of the oil in the country’s Strategic
Petroleum Reserve, a move his campaign said was aimed at
lowering the price of gasoline.
(Reporting by Richard Valdmanis in New York, Fayen Wong in
Perth, Ikuko Kao and Golnar Motevalli in London; editing by
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