Oil down below $69 in European trade on demand fears, amnesty in Nigeria for rebels
By Pablo Gorondi, APMonday, October 5, 2009
Oil falls below $69 as traders eye earnings
Oil prices fell below $69 a barrel Monday as investors worried about energy demand and looked to third quarter company earnings reports this week for clues about the health of the U.S. economy.
News about an agreement between the government and rebel groups in oil-rich Nigeria also pushed down prices.
By mid-afternoon in Europe, benchmark crude for November deliver was down $1.28 at $68.67 in electronic trading on the New York Mercantile Exchange. The contract fell 87 cents to settle at $69.95 on Friday.
Last week, weak economic data weighed on crude prices. The U.S. reported worse than expected manufacturing and jobs numbers, with the unemployment rate rising to 9.8 percent in September, the highest since 1983.
U.S. oil inventory data was mixed last week, suggesting consumer demand has yet to rebound strongly from the recession.
“Economic and oil data remain consistent with a macro economy just beginning to push off the trough, leaving markets with a lack of clear direction,” Goldman Sachs said in a report.
“Investors continue to worry about the weak crude oil demand outlook and rising inventories,” said Sucden Financial in London.
Traders will be eyeing the first earnings for the July to September period, with Aluminum producer Alcoa Inc., PepsiCo Inc. and Marriott International Inc. scheduled to report this week.
Some external risk factors which supported oil prices in the past also were judged to be losing strength.
“The improving geopolitical situation in Iran and Niger Delta looks set to remove some of the bullish premium from the oil prices,” said JBC Energy in Vienna, citing an upcoming visit by international inspectors to visit Iran’s newly disclosed uranium enrichment site and the decision by some rebel groups in Nigeria to accept a government amnesty and surrender their weapons.
“The disarmament … could see years of violence come to an end in yet another geopolitical hot spot and could help finally restore the region’s oil production to its full potential,” JBC said about the Nigerian accord.
For years, militants such as the Movement for the Emancipation of the Niger Delta have attacked oil installations and kidnapped foreigners, trying to force the federal government to increase the share of oil revenues sent to the impoverished area.
The unrest has cut Nigeria’s oil production by a million barrels a day, allowing Angola to overtake it as Africa’s top oil producer.
In other Nymex trading, heating oil fell 3.28 cents to $1.7640 a gallon. Gasoline for November delivery lost 2.32 cents to $1.7177 a gallon. Natural gas for November delivery dropped 2.2 cents to $4.696 per 1,000 cubic feet.
In London, Brent crude fell $1.38 to $66.69 on the ICE Futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.
Tags: Africa, Energy, Goldman sachs, Labor Economy, Nigeria, North America, Oil Prices, United States, West Africa