Oil Trades Below $80 For A Third Day On Economic Outlook
Oil traded below $80 a barrel for a third day in New York after a report indicated that central banks will struggle to boost global economic growth, threatening demand for fuel.
Futures slid as much as 0.6 percent. Developed economies are running into the limits ofmonetary policy, the Bank for International Settlements said in its annual report yesterday. Oil earlier rose as much as 1.2 percent after Tropical Storm Debby approached oil and gas installations in the Gulf of Mexico. Companies including ConocoPhillips (COP) and BP Plc (BP/)shut about 23 percent of output in the Gulf, according to the U.S. Bureau of Safety and Environmental Enforcement.
Oil for August delivery fell as much as 50 cents to $79.26 a barrel in electronic trading on theNew York Mercantile Exchange and was at $79.40 at 3:36 p.m. Singapore time. The contract increased $1.56 to $79.76 on June 22. Prices are 20 percent lower this year and have fallen 23 percent this quarter, the biggest decline since the final three months of 2008.
Brent oil for August settlement slid 59 cents, or 0.7 percent, to $90.39 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $10.99, from $11.22 on June 22.
Hedge funds reduced bullish oil bets to a 19-month low in the seven days ended June 19, according to the Commodity Futures Trading Commission’s Commitments of Traders report on June 22. Money managers, including funds, commodity pools and commodity trading advisers, cut wagers for a seventh week, paring futures and options combined by 5.9 percent to 122,815, the lowest level since Oct. 1, 2010.
Monetary policy only “buys time” in the short run for political leaders to act, and leaving an easy stance for a prolonged period poses economic risks, the Basel, Switzerland- based BIS said in its report. Central bank balance sheets now contain $18 trillion of assets, or about 30 percent of global gross domestic product, double the ratio of a decade ago, and interest rates are as “low as they can go,” it said.
Oil gave up earlier gains after Tropical Storm Debby shifted away from offshore energy installations. Royal Dutch Shell Plc (RDSA) evacuated 360 people and shut down production at the Auger and Enchilada/Salsa platforms, while BP, ConocoPhillips and Marathon all completed shut-ins. In Louisiana, Governor Bobby Jindal declared a state of emergency. The Gulf of Mexico is home to 29 percent of U.S. oil output and 40 percent of refining capacity.
The storm is stationary about 200 miles (320 kilometers) east-southeast of the mouth of the Mississippi River with top winds at 60 miles per hour, the National Hurricane Center said in anadvisory at 11 p.m. New York time yesterday.
Norwegian offshore workers shut two production platforms after talks on pensions and wages failed, curtailing output in Europe’s second-largest oil and natural-gas producer.
The strike will cut oil and gas output at Statoil ASA (STL)’s Oseberg and Heidrun fields, and close BP’s Skarv development, the Norwegian Oil Industry Association said yesterday. About 700 workers are being taken off the job at the start of the strike, which will also hurt operations atEurope’s biggest methanol plant.
The strike by oil-platform workers, which is the first industrywide action since 2004, targets about 165,000 barrels of oil equivalent a day, according to the Industry Energy and Lederne unions.