Business

Oil prices fall on Isaac watch

Sunday, August 26, 2012    

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NEW YORK - Oil prices dropped Friday amid renewed talk about the release of strategic reserves and as traders kept an eye on a tropical storm that could disrupt offshore operations in the Gulf of Mexico.

New York's main contract, light sweet crude for October, shed 12 cents from Thursday to close at US$96.15 a barrel.

In London, Brent North Sea crude for delivery in October dived US$1.42 to settle at US$113.59 a barrel.

Rich Ilczyszyn, an analyst at iiTrader, said that New York market sentiment was tense throughout the session and in the last half-hour traders shuffled their portfolios before the weekend.

Weighing on the market was a report by the Petroleum Economist that Western consumer countries could release strategic oil stocks as soon as early September in response to soaring oil prices, citing "several sources."

"The loss of supplies from sanctions-hit Iran will be used to justify the move, which could unleash as much or more oil as last year's 60 million barrel stock releases," the London-based industry journal said on its website.

One of the sources said the International Energy Agency asked the United States not to proceed alone with a release, but to wait for IEA-wide participation to avoid undermining IEA credibility.

Gulf of Mexico operators were bracing as Tropical Storm Isaac headed toward Haiti and was on track to threaten oil and gas offshore operations.

BP said it was evacuating its Thunder Horse platform, the world's largest offshore production and drilling facility.

"With forecasts indicating the storm could develop into a hurricane and enter the eastern side of the Gulf in coming days, we are taking additional steps to respond," the British oil giant said.

Shell said it was preparing for evacuations of non-essential personnel from platforms and had suspended some drilling operations but that no production had been impacted.

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