OPEC cuts global oil demand forecast as Mideast tensions continue
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures advanced on Wednesday, finding support as ongoing tension in the Mideast fed supply concerns, but a weaker global oil-demand forecast kept gains in check.
Crude oil for November delivery CLX2 +1.08% rose 77 cents, or 0.8%, to $93.16 a barrel on the New York Mercantile Exchange.
Oil futures had risen to their best settlement level in more than a week on Tuesday, rallying $3.06, or 3.4%.
“We’re balancing geopolitical risk versus [a] global slowdown in demand, and so far Middle Eastern tension tips the scale driving prices upward,” said Seth Rabinowitz, who covers commodities as a partner at Silicon Associates.
Geopolitical issues lifted prices for November Brent crude to as high as $114.75 a barrel, but prices have since pulled back to $114.51, up a penny from Tuesday’s settlement.
Analysts at Commerzbank said fears that the Syrian conflict will spill into Turkey and news of early elections in Israel were driving the gains for Brent.
“The nuclear dispute with Iran is likely to be the dominant issue in the forthcoming electoral campaign,” the analysts wrote in a note. “[Benjamin] Netanyahu, Israel’s current prime minister, has in recent months often called for a military strike against Iran’s nuclear facilities.”
Traders also kept an eye on the U.S. dollar. The ICE dollar index DXY -0.12% briefly traded over the 80 point-level for the first time in a month, as investors fretted over the world’s economic prospects after the International Monetary Fund downgraded its global growth outlook for 2012 and 2013 the prior day. See: Dollar index back over 80 after a month.
The dollar index, which measures the greenback against a basket of six major currencies, last traded at 79.929, pulling back from its intraday highs and compared to 79.973 in North American trade Tuesday.
“Crude oil has been bouncing back and forth today, inverse to movement in the U.S. dollar index,” said Darin Newsom, a senior analyst at Telvent DTN.
A stronger dollar tends to pressure prices for dollar-denominated commodities, while a weaker greenback helps support prices.
On Wednesday, the Organization of the Petroleum Exporting Countries lowered its forecast for global oil demand in 2012.
OPEC said in its monthly report that world oil demand will grow by 800,000 barrels a day in 2012, down 100,000 barrels from its previous forecast. See: OPEC lowers 2012 world oil demand forecast
Elsewhere in the energy sector, heating oil for November delivery HOX2 +0.91% was up 1 cent, or 0.4%, at $3.22 a gallon, and November gasoline RBX2 +0.87% rose 2 cents, or 0.6%, to $2.98 a gallon.
Natural-gas futures for November delivery NGX12 -0.09% were little changed at $3.47 per million British thermal units.
Petroleum supply data from the American Petroleum Institute will be released later Wednesday, a day late due to Monday’s Columbus Day holiday. The Energy Information Administration will also release its data a day later, on Thursday, at 11 a.m. Eastern.
Analysts polled by Platts expect the data to show that crude-oil supplies rose 1.5 million barrels for the week ended Oct. 5. They’re also looking for a decline of 400,000 barrels in gasoline stocks and for inventories of distillates to be unchanged.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Kristene Quan in Hong Kong contributed to this report.
