Brent slips below $109 as Sandy dampens demand
Singapore , October 30, 2012
Brent crude slipped below $109 a barrel on Tuesday as tropical cyclone Sandy shut East Coast refineries, roads and airports, reducing crude and fuel demand in the world's largest oil consumer.
Fuel supply into the region almost ground to a halt as Sandy, one of the bigggest storms ever to hit the US, forced the closure of two-thirds of the region's refineries, its biggest pipeline, and most major ports.
Brent crude for December slipped for a second session, down 62 cents to $108.82 a barrel by 0351 GMT. US crude for December edged down 34 cents to $85.20. US gasoline futures fell 1.03 percent to $2.7284 a gallon, after climbing more than 5 cents on Monday on expectations of tighter supply.
Global markets were subdued on the closure of New York stock exchanges, with Asian shares making modest gains.
Sandy battered the US East Coast, prompting the closure of air, ship, rail and even highway services, and knocked out power to more than 2.8 million homes and businesses in the region.
"People can't go out, they can't use, they can't consume," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm. "Crude inventories are running pretty high, 11-12 percent above a 5-year average."
"The only area of concern is if the refineries are going to be knocked out for a period of time," Barratt said, but added this would be a rare event as operators were prepared for the storm.
Sandy will close US stock markets for a second day on Tuesday, as Wall Street turned its attention to whether markets would be able to resume functioning for the month's final trading day on Wednesday.
The American Petroleum Institute said on Monday it has not delayed the release of its weekly petroleum stocks report yet, but it will continue to assess conditions.
Analysts, in a preliminary poll by Reuters, expect US crude inventories to rise by 1.5 million barrels for the week ended Oct. 26.
"We're not going to see much ease up on imports into the US Gulf," Carl Larry, president of Oil Outlooks and Opinions in the US said, adding that Saudi Aramco is busy getting ready to restart its Port Arthur refinery.
Speculators have cut their net long positions in Brent crude oil and gasoil futures and options after three weeks of increases, data from the IntercontinentalExchange (ICE) showed, as an impending restart at Britain's largest oilfield Buzzard cooled prices.
Yet, Buzzard's restart has again slipped by a few more days from Monday and this could delay shipments. - Reuters