Oil Falls Below $97 on Little Damage From Ike
Light, sweet crude for October delivery declined $4.39 to $96.79 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract rose 31 cents on Friday to settle at $101.18 after dropping as low as $99.99 per barrel. Before that, the last time Nymex crude traded below the $100 mark was April 2.
"Now that Ike has come and gone, initial reports indicate no real damage to the oil infrastructure in the Gulf coast area," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Federal officials said Sunday that the storm destroyed at least 10 oil and gas platforms and damaged pipelines in the Gulf of Mexico -- only a small amount of the 3,800 production platforms in the Gulf. Three years ago, back-to-back hurricanes knocked out more than 100 platforms.
Power outages were slowing efforts to restart the refineries. Valero Energy Corp. said only one of its closed refineries had power, and spokesman Bill Day said he couldn't estimated how long it would take to resume production.
"Hurricane-related problems on the region's electricity grid appear to be the biggest hurdle to a prompt restart of operations," wrote analysts from JBC Energy in Vienna, Austria.
Investors are now turning their attention toward falling oil demand in the U.S., Europe and Japan as slowing economic growth threatens to undermine consumer spending.
"Market sentiment is decidedly bearish, with all these concerns about developed countries going into recession or a serious slowdown impacting oil demand," Shum said.
Oil fell despite reports that militants have launched another attack Nigeria's oil infrastructure in a third day of violence.
Lt. Col. Sagir Musa of the Nigerian military task force in the southern oil delta region said militants in speedboats attacked troops at a Royal Dutch Shell PLC oil-pumping station early Monday. The fighters arrived in about 10 speed boats and detonated dynamite and other explosives during the battle.
Musa said it was possible that the so-called flow station was damaged during the attack. Shell officials said they were investigating reports of attacks on their facilities but could give no further details.
Prices were kept from falling further by a weakening dollar, amid new economic uncertainty on Wall Street, with the 158-year-old Lehman Brothers Holdings Inc. saying Monday it intends to file for Chapter 11 bankruptcy. The euro rose to $1.4299 on Monday from $1.4215 late Friday in New York, while the dollar dropped to 105.69 yen from 107.76 on Friday. Usually when the dollar falls, investors buy oil as a hedge against inflation.
In other Nymex trading, heating oil futures fell 13.31 cents to $2.806 a gallon, while gasoline prices dropped 18.01 cents to $2.59 a gallon. Natural gas for October delivery fell 6.8 cents to $7.298 per 1,000 cubic feet.
In London, October Brent crude fell $4.37 to $93.21 a barrel on the ICE Futures exchange.
Associated Press Writer Alex Kennedy contributed to this report from Singapore.