BLBG: Oil Falls a Second Day on Reduced Chance of Supply Disruptions
By Mark Shenk
Oct. 5 (Bloomberg) -- Crude oil fell for a second day on reduced concern about supply disruptions and as higher U.S. unemployment stifles fuel demand in the world’s biggest energy- consuming country.
Nigerian militants accepted an amnesty agreement yesterday, signaling that tensions are easing in the Niger Delta oil- producing region. A UN official said inspectors would visit Iran’s newly disclosed uranium processing plant on Oct. 25. A Labor Department report on Oct. 2 showed the U.S. unemployment rate reached the highest level since 1983.
“The most recent news from Nigeria and Iran has taken some of the geopolitical premium out of the market,” said Mike Fitzpatrick, vice president of energy with MF Global in New York. “Much of the recent economic data has been disappointing, but it hasn’t been enough to get prices to break out of the recent range.”
Crude oil for November delivery fell $1.45, or 2 percent, to $68.51 a barrel at 9:09 a.m. on the New York Mercantile Exchange. Futures have traded between $65.05 and $75 since Aug. 1. Prices have gained 54 percent this year.
Nigeria’s amnesty program for fighters in the southern oil- producing region is “a huge success” after rebel leader Government Ekpemupolo agreed to lay down his weapons, the Presidential Amnesty Committee said. Armed attacks in the Niger River delta have cut more than 20 percent of the country’s oil exports since 2006.
Mohamed ElBaradei, the International Atomic Energy Agency’s director general, called on Iran to assure the world it wasn’t building a bomb. Iran is the second-biggest oil producer in the Organization of Petroleum Exporting Countries.
ElBaradei said Iran’s relations with the international community were at a “critical moment” as it was “shifting gear from confrontation to transparency and cooperation.”
Asset Bubbles
Governments have injected $2 trillion in stimulus while central banks have cut interest rates to close to zero to revive growth. This “easy money” has created asset bubbles, causing markets to rise too quickly, economist Nouriel Roubini, the New York University professor who predicted the financial crisis, said Oct. 3 in an interview in Istanbul.
Equity and commodity markets may fall in coming months as the slow pace of the economic recovery disappoints investors, Roubini said.
“Better-than-expected non-OPEC supply, notably from Russia, elevated U.S. crude stocks, and disappointing U.S. manufacturing activity and unemployment all provide a weaker bias for crude prices this week,” said Harry Tchilinguirian, a senior oil analyst at BNP Paribas SA in London. “The nascent recovery still remains fragile.”
Brent crude oil for November settlement fell $1.43, or 2.1 percent, to $66.64 a barrel on the London-based ICE Futures Europe exchange.
