Oil rebounded as much as 0.7 per cent to top $US74 today on a weaker US dollar, but prices stayed close to last week's six-week lows on a combination of lacklustre economic indicators, rising risk aversion and a lack of hurricane activity in the Gulf of Mexico.
US crude for delivery in October, from Monday the front-month contract after September went off the board on Friday, climbed as much as 48 US cents to $US74.30 a barrel and was up 36 US cents at $US74.18, while October ICE Brent gained 36 US cents to $US74.62.
Front-month crude ended last week at the lowest level since early July, after prices touched a Friday intraday low of $US73.19. Prices have fallen more than 10 per cent from an August 4 high of $US82.97. For now, traders and analysts say, a rally may only be triggered by hurricane-related disruptions to output or refining.
"When we enter the hurricane season the market builds up a premium," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney. "The lack of weather is providing us with a little bit of an increase in suply, as inventories continue to build."
Tropical Storm Danielle formed over the mid-Atlantic on Sunday and could become a hurricane by Tuesday night, the US National Hurricane Center said, but it was headed for Bermuda, posing no threat to oil and gas infrastructure in the hydrocarbon-rich Gulf of Mexico.
HURRICANE SEASON SPUTTERING
Although forecasts are for the Atlantic hurricane season to be the most active in five years, no threatening storms were in sight as the period of peak activity between mid-August and mid-October kicked off. Only four storms have so far gained enough intensity to be named, versus 11 at this stage in the destructive 2005 season.
Hurricane Katrina, which in 2005 became the worst storm for the U.S. offshore oil industry, devastated platforms, pipelines and rigs as it cut across the Gulf in the last week of August.
Investors' interest in oil also diminished last week. Money managers cut net long crude oil positions on the New York Mercantile Exchange to less than 109,000 in the week through Aug. 17 from almost 129,000 a week earlier, the Commodity Futures Trading Commission said on Friday.
Oil prices this year have traded in a $US64.24-$US87.15 range, as recovering energy demand has been insufficient to drain ample supplies. US total petroleum stockpiles climbed to a record since weekly records began in 1990 the week ended Aug 13, according to government and industry data.
Reuters