Oil falls on economic fears, pipeline restart estimate

NEW YORK Fri Oct 19, 2012 4:14pm EDT

A man fills his truck up with gas at a gas station in Santa Monica, California, May 28, 2008. REUTERS/Lucy Nicholson

A man fills his truck up with gas at a gas station in Santa Monica, California, May 28, 2008.

Credit: Reuters/Lucy Nicholson

NEW YORK (Reuters) - Brent crude prices fell on Friday for the fourth straight session, dragged down by fresh global economic concerns and expectations a major Canadian crude oil pipeline to the United States would restart on schedule.

Concerns about the lack of progress on a Spanish bailout dampened risk appetite, helping send equities and commodity markets lower and lending support to the dollar. <USD/> .N

Oil prices initially turned negative in early U.S. trade following news that TransCanada Corp (TRP.TO) expected to restart the 590,000-barrel-per-day Keystone pipeline to the U.S. market over the weekend despite poor weather hampering efforts.

The line was shut on Wednesday after an anomaly was detected, but analysts said that with U.S. crude oil inventories healthy, the market should be able to absorb a short-term disruption with little problem. U.S. crude stocks are nearly 11 percent above year-ago levels, according to government data.

"Because of the ample supplies of oil (in the United States), a three-day closure is not extremely bullish -- if they announce a delay that's when the market will start to get a bid in it again," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Further pressure on prices came from a report showing U.S. home resales retreated in September from a two-year high.

Oil markets have been balancing the struggling economy and weak demand against supply problems in the North Sea, which have helped lift Brent crude's premium to U.S. oil to $20 a barrel.

Crude prices received an early lift on news that there was another delay in the restart of the North Sea Buzzard oilfield, which is now expected to restart on October 23 after a maintenance shutdown.

Brent December crude fell $2.28 to settle at $110.14 a barrel. The international benchmark traded as high as $113.27, just below the 50-day moving average of $113.33, before dipping as low as $110.05.

U.S. front-month November crude lost $2.05 to settle at $90.05 a barrel, after finding resistance at $93 a barrel area and testing support under $90 near the 100-day moving average.

Brent volumes were light, about 20 percent below its 30-day average, while U.S. trading activity was closer to normal levels.

Gasoline and heating oil futures also fell, off 1.6 and 1.4 percent, respectively, finding some support relative to crude prices due to concerns about supplies.

For the week, Brent lost $4.48, or 3.9 percent, while U.S. crude gave up $1.81, or 1.9 percent. Money managers cut net long positions by nearly 3,000 contracts to just over 193,000 contracts, in the week to October 16, according to data from the U.S. Commodity Futures Trading Commission.

(Additional reporting by Claire Milhench in London and Florence Tan in Singapore; Editing by Chizu Nomiyama, Marguerita Choy and Kenneth Barry)

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Comments (5)
What a load of BS. When supply was busting out at the seams, we’re told it was the weak dollar pushing up the price. Now that the dollar has strengthened, suddenly there are supply concerns. There is no reason for anyone to believe what they read concerning oil. Why doesn’t Reuters tell it like it is, the greedy are manufacturing numbers to line their pockets.

Oct 19, 2012 1:17pm EDT  --  Report as abuse
What a load of BS. When supply was busting out at the seams, we’re told it was the weak dollar pushing up the price. Now that the dollar has strengthened, suddenly there are supply concerns. There is no reason for anyone to believe what they read concerning oil. Why doesn’t Reuters tell it like it is, the greedy are manufacturing numbers to line their pockets.

Oct 19, 2012 1:17pm EDT  --  Report as abuse
todnwth wrote:
Every time some one says anything about crude supplying even 5 gallons the media says there is a shortage and the oil companies and gas stations add 10 cents to price of gasoline–if they have 100 thousand barrels in excess they may drop the price a penny in a week unless of course some one says something about a well shut down that was pumping 10 barrels a day.

Oct 19, 2012 8:39pm EDT  --  Report as abuse
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