Oil drops $1, Wilma threat eases ($63.43/bbl)

Reuters ^ | October 18, 2005

[RWR8189]

LONDON (Reuters) - Oil fell $1 a barrel on Tuesday as a threatened hurricane was expected to miss rigs and refineries in the U.S. Gulf and the world's top banker said record prices were eroding demand.

U.S. crude lost 98 cents to $63.38 a barrel by 1125 GMT, after a gain of 2.8 percent on Monday. London Brent crude was $1.06 down at $59.51 a barrel.

Tropical Storm Wilma gained strength in the Caribbean Sea and was expected to become a full-blown hurricane, but its path was set to shift east toward Florida and away from the heart of U.S. oil infrastructure in the Gulf of Mexico.

"If it does turn away toward Florida it will be a non-event," said oil trader Colin Tang at investment bank Calyon in Singapore. "The market got ahead of itself on Monday."

Traders worried that Wilma, the 21st named storm of the 2005 Atlantic season, could delay a recovery in U.S. output ahead of peak winter heating fuel demand in the northern hemisphere.

As much as 66.4 percent of the Gulf of Mexico region's normal 1.5 million barrels per day (bpd) production remained shut on Monday in the aftermath of Hurricanes Katrina and Rita, the U.S. Minerals Management Service said in its latest report.

Prices have fallen from a late August high above $70 as signs emerged that high energy costs are eroding demand. But oil, in real terms, is near levels unseen in a quarter century.

U.S. Federal Reserve Chairman Alan Greenspan handed more evidence to investors weighing the extent of oil "demand destruction."

"Although the global economic expansion appears to have been on a reasonably firm path through the summer months, the recent surge in energy prices will undoubtedly be a drag from now on," Greenspan said in a speech in Tokyo.

But he said expensive oil was encouraging Americans to become more energy efficient and cut gasoline consumption.

Signs of slower U.S. demand have led to forecasts of lower demand growth, with producer cartel OPEC revising down its 2005 outlook to 1.2 million bpd. It expects demand growth to recover to 1.5 million bpd next year.

Further direction on supplies in the world's largest consumer should come from U.S. government data due on Wednesday.

The data was forecast to show a 1.7 million-barrel build in crude stocks but a 1.8 million drop in distillate inventories, including heating oil.

[RWR8189]

 Light, Sweet Crude Oil

10/18/2005 Session Contract Detail for Nov 5

	Last				63.43
	Open High				64.30
	Open Low				64.30
	High				64.40
	Low				63.37
	Settle				64.36
	Change				-.93
	Open Interest				80897
	Volume				0.00
	Last Updated				10/18/2005 07:13:30

 Unleaded Gasoline

	Last				1.7655
	Open High				1.8100
	Open Low				1.8100
	High				1.8150
	Low				1.7635
	Settle				1.8153
	Change				-.0498
	Open Interest				35750
	Volume				0.00
	Last Updated				10/18/2005 07:13:18

Heating Oil

	Last				1.9450
	Open High				1.9850
	Open Low				1.9850
	High				1.9908
	Low				1.9405
	Settle				1.9833
	Change				-.0383
	Open Interest				35965
	Volume				0.00
	Last Updated				10/18/2005 07:16:25

[q_an_a]

gasoline futures are down to 1.73 and OK is retailing gas at 2.35 - according to a story yesterday on dallas NBC station. watch for some folks to be dumping gasoline soon.

[SunkenCiv]

The prices around here never took a jump upward (not that they had to). Hovering around $2.60, they've slid to around $2.55 -- and now I'm glad I avoided topping the tank yesterday.

from a day ago:

Oil surges on Wilma worries
New tropical storm in the Caribbean threatens already beleaguered Gulf production; blasts rock Iran.
October 17, 2005: 3:32 PM EDT
http://money.cnn.com/2005/10/17/markets/oil.reut/?cnn=yes

"The last time there were so many named storms was 1933."

[Berosus]

"If it does turn away toward Florida it will be a non-event," said oil trader Colin Tang at investment bank Calyon in Singapore.

Maybe it will be a non-event for Mr. Tang, but not for me in Orlando. Last year we got hit by three hurricanes (Charley, Frances and Jeanne) and suffered a near miss from a fourth (Ivan). Here we go again. *sigh*