NEW YORK, 22 September 2007 — Oil slipped below $82 yesterday as energy companies prepared to return workers to the offshore Gulf of Mexico after a storm triggered evacuations earlier in the week.
Some 27.7 percent of the Gulf’s oil production was shut by the foul weather, but at least two oil companies said yesterday they planned to resume production soon because the storm had failed to strengthen significantly. The tropical depression, the 10th to form this Atlantic hurricane season, was expected to hit the Mississippi coast sometime Saturday.
US crude for November delivery fell 60 cents to $81.18 a barrel by 1700 GMT. The October US crude oil contract expired on Thursday after it hit a record for the seventh straight session at $84.10. London Brent crude was 9 cents lower at $79.00. Oil has traded above $80 for the past week, boosted by a string of bullish factors including falling crude stocks in the United States, the threat of hurricane damage to oil facilities in the Gulf of Mexico and a weak dollar.
The Federal Reserve’s aggressive half-point cut in US interest rates this week to boost the ailing economy has buoyed oil, easing fears of a slowdown that could sap energy demand.
“Although the macro-economic environment remains uncertain, forward looking market balances look extremely tight especially for oil and base metals,” Barclays Capital said in a research note. Other analysts said oil’s relentless rise made it vulnerable to a sharp fall.
“It seems clear to us that fear is overriding fundamentals, thus feeding the upward frenzy,” said Edward Meir at MF Global. “However, such a market mindset is not sustainable, and could trigger a rather severe correction once the music stops.”
