BLBG: Crude Oil Trades Little Changes as Tropical Storm Ida Weakens
By Alexander Kwiatkowski and Ayesha Daya
Nov. 10 (Bloomberg) -- Crude oil traded little changed after Tropical Storm Ida weakened in the Gulf of Mexico as it headed for the U.S. coast, reducing the potential of further supply disruptions.
Ida’s sustained winds have dropped to 60 miles (97 kilometers) per hour from 65 mph earlier, the National Hurricane Center said on its Web site. Producers have begun preparations to resume operations. Oil recovered earlier losses as the dollar weakened to $1.5006 against the euro, boosting the appeal of commodities.
“The fears that the hurricane will last longer are definitely receding and that’s the reason oil isn’t stronger,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich. “The dollar at $1.50 definitely shows weakness and that is supportive for crude.”
Oil for December delivery traded at $79.29 a barrel, down 14 cents, in electronic trading on the New York Mercantile Exchange at 11:57 a.m. London time. It earlier fell as much as 88 cents, or 1.1 percent, to $78.55 a barrel. Prices have gained 77 percent this year.
Ida was centered 100 miles south-southwest of Mobile, Alabama, at 9 p.m. local time and was moving north at 13 mph, the center said. Workers were evacuated in the Gulf of Mexico and companies idled 29.6 percent of oil and 27.5 percent of natural gas output, according to government data.
Marathon Oil
Marathon Oil Corp. said it may start work on bringing output back tomorrow. The company had evacuated and shut in production at a platform located at Ewing Bank 873, which can produce the equivalent of about 12,000 barrels of oil a day, Lee Warren, a company spokesman, said in an e-mail.
Crude recovered earlier losses as the dollar gave up gains against the euro, making the commodity more attractive to investors as an inflation hedge. The U.S. currency was at $1.5012 against the euro in London at 11:35 a.m., compared with $1.4999 yesterday.
Prices declined in early trading after an official from the Organization of Petroleum Exporting Countries said the group is unlikely to change production levels.
The group won’t need to raise output when it meets next month in Angola because stockpiles are “a worry” and will rise early next year, the group’s head of research Hasan Qabazard said in an interview in Doha, Qatar today.
Brent crude for December settlement traded at $77.71 a barrel, down 6 cents, on the London-based ICE Futures Europe exchange at 11:57 a.m. local time. It earlier fell as much as 87 cents, or 1.1 percent, to $76.90.
‘Weak Fundamentals’
“Oil is still trading below $80 a barrel because the fundamentals are very weak and we have an oversupply in the market,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “Crude oil and oil product inventories are well below the five-year average.”
The International Energy Agency cut its long-term forecast for global oil demand today as the economic crisis saps consumption in developed economies and environmental policies encourage alternative energy use.
Global oil demand is expected to advance 1 percent a year to 105 million barrels a day by 2030 from 85 million barrels a day in 2008, the adviser to 28 nations said today in its annual World Energy Outlook. The figure is below last year’s 2030 estimate of 106 million barrels a day.
Crude Inventories
U.S. crude-oil inventories probably rose 1 million barrels in the week ended Nov. 6, according to the median of 10 estimates by analysts before an Energy Department report.
Supplies of distillate fuel, a category that includes heating oil and diesel, declined 700,000 barrels from 167.4 million the prior week, according to the survey. Gasoline stockpiles probably dropped 400,000 barrels from 208.3 million in the week before, the survey showed.
The department is scheduled to release its weekly report on Nov. 12 at 11 a.m. in Washington, a day later than usual because of the Veterans’ Day holiday tomorrow.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net
