Oil price update - Aug 22
Oil prices rose on Wednesday, but remained below $70 after Hurricane Dean weakened as it swept into the Gulf of Mexico, reducing the threat of damage to oil installations. US crude was 22 cents higher at $69.79 a barrel by 1030 GMT. Prices had fallen 2% on Tuesday to their lowest close since late June.
London Brent crude gained 20 cents to $68.89 a barrel.
The hurricane, which boosted prices last week, has been downgraded to a Category 1 hurricane from a potentially catastrophic Category 5 storm after passing over Mexico's Yucantan Peninsula toward the Campeche Sound, where oilfields are located.
As a precaution, Mexico has shut in 2.65 million barrels per day of production - around 80% of its output - and state oil company Pemex has evacuated more than 18,000 staff.
There was no early information from Pemex on whether oil platforms were damaged as Dean ploughed through Gulf waters in the Campeche Sound.
"Dean is projected to barrel through the heart of Mexican oil and natural gas offshore production facilities in the Bay of Campeche as a strong Category 2 or weak Category 3 hurricane and disruptions of oil and natural gas production could be significant," Goldman Sachs said in a research note. "This may further tighten already tight oil fundamentals."
The latest update on oil inventories in the top consumer the US is due later on Wednesday from the US Energy Information Administration. US crude stocks are expected to have fallen last week for the seventh week in a row, according to a Reuters poll.
US weekly oil inventory data, due out at 1430 GMT, is expected to show a 2.8 million-barrel fall in crude stocks, and a 900,000-barrel drawdown in gasoline inventories. But distillate stocks are set to rise by 800,000 barrels, which may ease pre-winter supply worries.
Oil prices have fallen back from a record high of $78.77 a barrel on August 1, pressured partly by fears that turmoil in global financial markets could hurt economic growth. World financial markets have been hit by a crisis in the credit markets caused by troubles in the subprime, or high-risk segment of the US mortgage market.
But oil demand remains robust. Demand from top Asian consumers has shown little sign of slowing, with implied consumption in China rising 5% in July from a year ago. For the first seven months of the year, oil demand in China is up 4.5% from a year earlier at 6.9 million bpd, although Beijing's efforts to cool its booming economy with another official interest rate rise might check growth. Source
London Brent crude gained 20 cents to $68.89 a barrel.
The hurricane, which boosted prices last week, has been downgraded to a Category 1 hurricane from a potentially catastrophic Category 5 storm after passing over Mexico's Yucantan Peninsula toward the Campeche Sound, where oilfields are located.
As a precaution, Mexico has shut in 2.65 million barrels per day of production - around 80% of its output - and state oil company Pemex has evacuated more than 18,000 staff.
There was no early information from Pemex on whether oil platforms were damaged as Dean ploughed through Gulf waters in the Campeche Sound.
"Dean is projected to barrel through the heart of Mexican oil and natural gas offshore production facilities in the Bay of Campeche as a strong Category 2 or weak Category 3 hurricane and disruptions of oil and natural gas production could be significant," Goldman Sachs said in a research note. "This may further tighten already tight oil fundamentals."
The latest update on oil inventories in the top consumer the US is due later on Wednesday from the US Energy Information Administration. US crude stocks are expected to have fallen last week for the seventh week in a row, according to a Reuters poll.
US weekly oil inventory data, due out at 1430 GMT, is expected to show a 2.8 million-barrel fall in crude stocks, and a 900,000-barrel drawdown in gasoline inventories. But distillate stocks are set to rise by 800,000 barrels, which may ease pre-winter supply worries.
Oil prices have fallen back from a record high of $78.77 a barrel on August 1, pressured partly by fears that turmoil in global financial markets could hurt economic growth. World financial markets have been hit by a crisis in the credit markets caused by troubles in the subprime, or high-risk segment of the US mortgage market.
But oil demand remains robust. Demand from top Asian consumers has shown little sign of slowing, with implied consumption in China rising 5% in July from a year ago. For the first seven months of the year, oil demand in China is up 4.5% from a year earlier at 6.9 million bpd, although Beijing's efforts to cool its booming economy with another official interest rate rise might check growth. Source
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