Crude oil prices drop as G-7 calls for increased production – USATODAY.com

Posted: August 30, 2012 in Uncategorized

Oil prices fell Wednesday as U.S. supplies of crude rose for the first time in a month and finance ministers from industrialized nations pleaded with top producers to help lower crude prices and help the global economy.

An oil pump works in the desert oil fields of Sakhir, Bahrain, Aug. 22, 2012.

By Hasan Jamali, AP

An oil pump works in the desert oil fields of Sakhir, Bahrain, Aug. 22, 2012.

 

By Hasan Jamali, AP

An oil pump works in the desert oil fields of Sakhir, Bahrain, Aug. 22, 2012.

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Traders also watched for any reports of significant damage from Tropical Storm Isaac as it passed over oil facilities in the Gulf of Mexico. Nearly 95% of Gulf production was halted because of the storm.

Benchmark oil fell 84 cents to finish at $95.49 per barrel in New York. Brent crude, which is used to price international varieties of oil, fell 4 cents to $112.54 per barrel in London.

 

The government reported that the U.S. crude inventories increased by 3.8 million barrels to 364.5 million barrels last week. Analysts had expected a drop of 2 million barrels, according to Platts, the energy information arm of McGraw-Hill.

Separately, finance ministers from the Group of Seven countries said they are concerned that higher oil prices pose a risk to the sluggish global economy. They appealed to oil-producing countries to increase output while also suggesting they could ask the International Energy Agency to release oil from strategic reserves. The G-7 includes the U.S., Japan, Germany, France, Britain, Italy and Canada. The IEA represents more than two dozen oil-importing nations.

Maria van der Hoeven, who heads the IEA, told Bloomberg News that there is no need for a release from its stockpiles. “The market is sufficiently well supplied,” she said in an interview in Stavanger, Norway, adding that any action would require “a serious disruption of supply.”

Oil futures prices

Crude oil, dollars per barrel, 6 months.

The price of oil has risen by more than 20% since late June. But both benchmark U.S. oil and Brent crude remain more than 10% below their highs for the year.

Meanwhile, Isaac, which was downgraded to a tropical storm Wednesday afternoon, was at hurrican strength when it pushed inland and battered the Gulf Coast. But it could be days before the extent of any damage to oil production facilities and coastal refineries is known.

Early reports indicated some rigs that were moved ahead of the storm were accounted for and all mobile drilling units remained in position, according to the Bureau of Safety and Environmental Enforcement.

Royal Dutch Shell plans to conduct a flyover inspection of its Gulf operations on Thursday as the weather improves. If conditions prove safe, it will deploy staff Friday to begin restarting operations. Exxon Mobil said it’s beginning to assess Isaac’s impact on its operations in and around the Gulf as well.

About 1.3 million barrels per day of oil production has been shut down because of the Gulf closures. Some of that impact has been softened by changes in the market and the facilities themselves over the past few years.

Technological advances have led to a jump in oil production from onshore operations since hurricanes last hit the Gulf in 2008. And rigs have been constructed to be more durable after previous hurricanes.

“The storm wasn’t strong enough to probably do any serious infrastructure damage,” said Kyle Cooper, managing director of research at Cyprus Energy LP. He said offshore oil production could resume within two to three days if there is no damage.

In other energy trading: heating oil fell 46 cents to end at $3.1157 per gallon; wholesale gasoline fell 2.6 cents to end at $3.10 per gallon and natural gas rose 2 cents to end at $2.634 per 1,000 cubic feet.

The government estimated that nearly 72% of Gulf natural gas production has been suspended due to Isaac.

Pamela Sampson in Bangkok contributed to this report.

Copyright 2012 The Associated Press. All rights reserved. This material may not be publishe

via Crude oil prices drop as G-7 calls for increased production – USATODAY.com.

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