Crude drops; Gulf platforms OK
NEW YORK - Crude oil fell yesterday as Royal Dutch Shell PLC and ConocoPhillips said Hurricane Gustav caused no damage to platforms in the Gulf of Mexico.
Exxon Mobil Corp. said workers are returning to offshore platforms that weren't in the direct path of Gustav. Oil fell 5.9 percent this week as the euro dropped to a seven-month low against the dollar. Prices rebounded from the session's lows on forecasts that tropical storms were forming in the Atlantic.
"The next number we are going to test is $100," said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $4.5 billion energy-company bond portfolio. "One hedge fund has shut down and the demand picture here has been ugly, so the market will remain under downward pressure."
Crude oil for October delivery fell 23 cents to $109.48 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices, which are up 46 percent from a year ago, are 26 percent lower than the record of $147.27 reached on July 11.
Shell said yesterday that initial reports indicate no major damage to the oil producer's onshore facilities in Louisiana. ConocoPhillips said there was no "significant damage" to its Magnolia platform in the Gulf.
Anadarko Petroleum Corp. restarted production at its Nansen and Boomvang platforms in the Gulf Tuesday and is returning workers to offshore facilities that were outside the path of Gustav.
The Organization of Petroleum Exporting Countries will meet Tuesday in Vienna to review production targets.
"There is going to be a lot of talk from OPEC because of the drop in prices," Hodge said. "Iran and Venezuela will want to defend high prices at all costs because they need the funds, given all of their social spending. The Saudis might actually want to see prices fall a bit more."