petroleumworld

Oil prices were little changed Monday as investors mulled expectations of an inventory decline in the United States and as concerns over a storm threat to drilling in the Gulf of Mexico eased.

New York's main contract, light sweet crude for delivery in September, ended unchanged at 78.98 dollars a barrel.

London's Brent North Sea crude for September gained five cents to 77.50 dollars.

Investors factored in reports Monday that US crude inventory was expected to show a drop this week, indicating greater energy demand in the world's largest economy.

Last week's inventory data showed an unexpectedly big rise in crude stocks.

Most analysts released their inventory expectations for this week and "I think that what pushed the market back up," said analyst Jason Schenker of Prestige Economics.

"Expectations are that they is going to be a crude draw."

Government data showing a big jump in new US home sales also helped to stabilize the market.

The Commerce Department said sales increased 23.6 percent to 330,000 units in June from a revised May rate of 267,000, a record low.

Investors also digested news that tropical storm Bonnie blew itself out in the Gulf of Mexico over the weekend, after causing disruption to shipping and oil output.

"The passage and deterioration of Tropical Storm Bonnie, which had disrupted around 50 percent of US production in the Gulf of Mexico waters last week, has relieved some market fears," analysts at Sucden Financial Research said in a note.

However, resumption of normal operations has been slow and has not yet reached full capacity; as of Sunday, 46 percent of oil production capacity was still off-line, according to reports.

"Currently, there is plenty of crude, distillates and gasoline in storage to make it through a couple ferocious storms," said Mike Fitzpatrick, vice president for MF Global.

New York oil rallied close to 80 dollars on Friday as Bonnie swirled towards the Gulf of Mexico -- but then pulled back after stress test results on Europe's banks were released.

Skepticism over European banking-sector stress tests, which cleared all but seven European lenders, got a subdued welcome on stock markets on Monday.

Story from AFP
AFP 07/26/2010 21:12

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