Crude Lower as Isaac Fades, Bernanke Looms
U.S. crude futures fell Thursday as workers began to return to oil platforms in the Gulf of Mexico and investors awaited remarks Friday from Federal Reserve Chairman Ben Bernanke.
Light, sweet crude for October delivery settled 87 cents, or 0.9%, lower at $94.62 a barrel on the New York Mercantile Exchange, the lowest settlement in two weeks. Brent crude on the ICE futures exchange for October delivery traded 29 cents higher at $112.83 a barrel.
Oil prices took their cues from the stock market and a rising U.S. dollar Thursday as traders' focus turned from oil-production outages due to Hurricane Isaac and towards the broader economy.
"Higher crude-oil needs a strong stock market and a weak U.S. dollar and you have the reverse today," says Walter Zimmermann, an analyst at brokerage United-ICAP.
The Dow Jones Industrial Average was recently down 0.6% to 13,026.
Investors are awaiting remarks Friday morning from Federal Reserve Chairman Ben Bernanke who is expected to speak at the central bank's gathering in Jackson Hole, Wyo. Markets are looking for some signal that the central bank will act again to provide stimulus for the U.S. economy.
"It's all about Bernanke and Jackson Hole tomorrow," said Matt Zeman, market strategist at Kingsview Financial.
In 2010, as the U.S. recovery was sputtering, Mr. Bernanke used the occasion of his Jackson Hole speech to suggest that further stimulus was ahead. Later that year, the Fed unveiled a second round of quantitative easing, or QE2, which led to a rise in equities as well as oil prices.
Meanwhile, Hurricane Isaac was downgraded to a tropical storm Wednesday as it headed north through Louisiana, and oil markets were hopeful that the Gulf oil platforms shut down ahead of the storm would quickly return to operation.
On Thursday, workers began returning to oil production facilities. Chevron Corp. (CVX) said it has begun to deploy personnel to onshore and offshore facilities to check for hurricane damage.
"When there is a hurricane there is no reason to sell. Afterwards when nothing has happened, it's a good time to take profits," said Sean McGillivray, a broker at Great Pacific Wealth Management.
Nearly 95% of oil output from the U.S. Gulf was shut ahead of the storm, according the government data.
After surging through most of July and August, oil prices have begun to stall near $95 a barrel. Isaac provided a small boost to prices earlier this week as producers shut in the majority of Gulf oil output. However, it also revived talk that the U.S. may act to tamp down prices by opening up the Strategic Petroleum Reserve.
Front-month September reformulated gasoline blendstock, or RBOB, settled 1.77 cents lower at $3.0826 a gallon. September heating oil settled 0.88 cent higher at $3.1245 a gallon.
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