LONDON -- Oil fell towards US$78 a barrel on Monday, after earlier touching the highest in almost eight weeks, as concern eased about the impact on supply from tropical storm Alex.
Over the weekend, Alex became the first named storm of the 2010 Atlantic hurricane season, which forecasters expect to be active. They said the storm could become a hurricane on Monday or Tuesday.
U.S. crude for August was down US57¢ at US$78.29 as of 11:08 GMT. It earlier rose as high as US$79.38, the highest intra-day price since May 6. August Brent crude was down US72¢ at US$77.40.
“It’s profit-taking after the near two-month high and the failure to reach the US$80 level,” said Carsten Fritsch, an analyst at Commerzbank.
“The market is oversupplied. Given the high level of stockpiles, any supply disruptions (caused by the storm) could be met easily as long as they are short-lived.”
OPEC Secretary General Abdullah al-Badri on Sunday put the “inventory overhang” and oil held in storage on tankers at about 244 million barrels — equal to almost three days’ of global oil demand.
“Many changes can still occur in the next 48 hours, and that is why weather markets are volatile,” said Olivier Jakob, an analyst at Petromatrix.
“But we start the week with a storm picture that should be if still a concern, a lesser one than at the end of last week.”
European equities rose on Monday and the U.S. dollar was slightly higher against a basket of other currencies as investors assessed the implications of a G20 meeting. Gold rose to near its record high.
World leaders agreed on Sunday to take different paths for cutting budget deficits and making their banking systems safer, a reflection of the uneven and fragile economic recovery in many countries.
Mexico closed two of its main Gulf of Mexico oil exporting terminals on Sunday as Alex moved over the Yucatan peninsula, the government said.
The ports of Cayo Arcas and Dos Bocas typically handle combined exports of more than 1.1 million barrels per day (bpd), or about 80% of Mexico’s shipments abroad, which mainly head to U.S. refineries.
Shell Oil shut subsea production at two platforms, and BP evacuated some personnel from three Gulf of Mexico platforms, the companies said on Sunday.
The U.S. National Oceanic and Atmospheric Administration forecasts 14 to 23 named storms for this year’s season, with eight to 14 developing into hurricanes. Three to seven of those could be major Category 3 or above hurricanes.
Traders and investors also are seeking evidence that the world’s largest economy continues to recover. U.S. May personal spending data is due at 12:30 GMT on Monday and June unemployment statistics are to be published on Friday.
