Crude oil fell to a 13-week low amid speculation that Tropical Storm Edouard will miss most offshore oil facilities as it approaches the coast of Texas.
Futures fell as much as $5.60 a barrel, shrugging off port closings and rig evacuations in the Gulf, a threat to oil supplies from Iran and a fire at Valero Energy Corp.’s Houston refinery. Edouard, which may become a hurricane today, was on a course to make landfall in Texas this morning.
“A market that can’t rally on bullish news is a bear market,” said Tim Evans, an energy analyst for Citi Futures Perspective in New York. “We’re just seeing disappointment that for all of the tropical-storm news, the talk of Iran and Valero’s explosion, all of these bullish stories are not pushing the price higher.”
Crude oil for September delivery fell $3.69, or 3 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange, the lowest close since May 5. New York oil futures have slipped more than $25 a barrel, or 18 percent, from the record $147.27 on July 11 amid lower U.S. fuel demand.
Oil also fell because the Organization of Petroleum Exporting Countries’ crude-oil production advanced for a third month on higher Saudi Arabian output, according to a Reuters report, and amid signs the U.S. economy was slowing, which could curtail demand.
Producers have idled less than 1 percent of oil output and 7.2 percent of natural gas production in the Gulf of Mexico because of Tropical Storm Edouard, the U.S. Minerals Management Service said.
Apache Corp. halted 8,600 barrels a day of oil production and 130 million cubic feet a day of natural gas output today as it evacuated 110 workers from platforms off the coast of Louisiana because of the storm.
“A lot of the fear about something really affecting those rigs appears to have slackened,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Conn. “The threat is that there’s a large enough amount of rainfall that those refineries could be affected for a while.”
Edouard may pass close to Exxon Mobil’s Baytown oil refinery as well as BP’s Texas City plant.
“It doesn’t look like it’s a big deal yet,” Peter Beutel, president of Connecticut-based Cameron Hanover Inc., said in a radio interview. “It doesn’t look especially strong right now and refineries aren’t producing all-out in any event.”
U.S. refineries ran at 87.2 percent of capacity in the week ended July 25, down 6.5 percentage points from a year earlier, as high prices of crude oil and declining gasoline demand cut refining margins.