Oil drops toward $77 as U.S. storm threat eases
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[September 05, 2018]
By Alex Lawler
LONDON (Reuters) - Oil fell toward $77 a
barrel on Wednesday as a tropical storm hitting the U.S. Gulf coast
weakened and moved away from oil-producing areas, easing supply
Crude had jumped the previous day as oil companies shut dozens of
offshore platforms in anticipation of damage from tropical storm Gordon.
But by Wednesday the storm was weakening, reducing its threat to oil
"Tropical storm Gordon made an uneventful landfall after dashing
expectations that it would strengthen to a hurricane," said Stephen
Brennock of oil broker PVM.
"Instead, it weakened considerably and deviated away from oil-producing
areas, which, as a result, has taken the wind out of bulls' sails."
Brent crude <LCOc1>, the global benchmark, fell 78 cents to $77.39 a
barrel by 1113 GMT. On Tuesday prices had climbed to $79.72, their
highest since May.
U.S. crude <CLc1> was down 88 cents at $68.99.
"Storm in a teacup," said analysts at JBC Energy, referring to Gordon's
limited impact on oil pricing.
Oil could draw some support if weekly reports on U.S. inventories show a
drop in crude inventories, as expected. Analysts estimate, on average,
that stocks fell by about 1.9 million barrels last week.
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The Chevron Pascagoula Refinery is pictured as Tropical Storm Gordon
approaches Pascagoula, Mississippi, U.S., September 4, 2018.
The American Petroleum Institute, an industry group, releases its supply report
at 2030 GMT on Wednesday, a day later than usual because of the Labor Day
holiday on Monday. Official government figures are due on Thursday.
Brent has traded between $70 and $80 since April, a range that Saudi Arabia and
other producers in the Organization of the Petroleum Exporting Countries would
like to see maintained for now, OPEC and industry sources have said.
U.S. sanctions targeting Iran's oil sector from November are already reducing
exports from OPEC's third-largest producer and counteracting the impact of an
agreement by OPEC and its allies to pump more oil.
"With the anticipation of up to 1.5 million barrels per day affected by the U.S.
sanctions on Iran, one would expect prices to move higher in the weeks ahead,"
said Stephen Innes, of futures brokerage OANDA.
(Additional reporting by Henning Gloystein; Editing by David Goodman and Edmund
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