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Brent oil falls below $100 a barrel PDF Print E-mail
Friday, 12 September 2008

Reuters, London- Brent crude oil prices fell below $100 a barrel for the first time in five months Tuesday on expectations that OPEC would leave formal output targets unchanged and as Hurricane Ike's threat to US Gulf of Mexico energy infrastructure receded.

London Brent fell $4.54 to $99.04 a barrel -- the first time world oil prices have traded in the double digits since April 2 -- before trimming losses to settle down $3.10 to $100.34 a barrel. The US benchmark fell $3.08 to settle at $103.26 a barrel.
 
OPEC ministers meeting in Vienna were leaning toward leaving formal output targets unchanged despite some members' suggestions that a cut is needed to stem a steep decline in oil prices since mid-July.
 
But the group still could move quietly to trim excess output. As a whole, OPEC is estimated to be producing about 790,000 barrels per day above a collective ceiling of 29.67 million bpd for its 12 members with output limits.
 
Oil has fallen by nearly 30 percent from record highs of more than $147 a barrel in July, pressured partly by a rebound in the U.S. dollar and a drop in demand from top energy consumer the United States.
 
"OPEC leaving quotas unchanged is a little disappointing for the market," said UBS oil strategist Thomas Stenvoll.
 
Adding pressure to prices, forecasters said Hurricane Ike was likely to cross the Gulf of Mexico well south and west of the largest cluster of oil and gas platforms before hitting the south Texas coast at the end of the week. The path was unlikely to damage facilities.
 
Nonetheless, energy companies still recovering from Hurricane Gustav last week began shutting production as a precaution as Ike approached the region, home to a quarter of US oil production and 15 percent of natural gas output.
 
"If this storm does nothing, I think this could be the event that pushes oil back below that $100 a barrel area," said Phil Flynn of Alaron Trading.
 
Some 78 percent of the Gulf's crude oil output was shut Tuesday morning, and some 12 million barrels of cumulative US crude oil production has been lost since Gustav formed in late August, according to the Minerals Management Service.
 
The impact of the storm shutdowns is expected to be reflected in weekly US government inventory data, due out Wednesday.
 
A Reuters poll of analysts forecast data would show a 4.3 million barrel draw in U.S. crude oil stocks last week. Gasoline stocks were seen down by 4.2 million barrels and distillates by 2.5 million barrels.
 
"We will see more than the usual amount of draws coming out of inventories both this week and next," said Edward Meir of broker MF Global.

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