Ike and OPEC send oil below $104
NEW YORK - Oil prices closed below $104 a barrel yesterday for the first time since early April as traders bet that Hurricane Ike would miss critical Gulf Coast oil installations and in Vienna, OPEC's president signaled the cartel wouldn't cut production.
Light, sweet crude for October delivery fell $3.08 to settle at $103.26 on the New York Mercantile Exchange, the lowest settlement price since April 1. The contract rose 11 cents to settle at $106.34 in volatile trading Monday.
In aftermarket trading yesterday, prices tumbled more than $4 a barrel to a new five-month low of $101.85.
Crude's decline puts the contract within striking distance of the psychologically important $100 threshold, a level first reached on Feb. 19.
In London, October Brent crude fell as low as $98.94 a barrel on the ICE Futures exchange, slipping below $100 for the first time since April 2. The contract later settled $3.10 lower at $100.34 a barrel.
"It looks like a total exodus out of the market right now," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. "Now that Ike and OPEC don't look like threats to supply, the market is running out of reasons to remain strong."
Ike roared ashore south of the Cuban capital of Havana early yesterday after shifting course overnight on a track that could hit anywhere from northern Mexico to Corpus Christi, Texas - well south of major oil and natural gas installations in the Gulf of Mexico. The storm also weakened Monday.
Still, forecasters warned that a low pressure system could nudge the storm to the north, limiting the downward pressure on oil prices.
Oil market traders were also keeping a close watch on an OPEC meeting in Vienna.
Oil ministers from the Organization of Petroleum Exporting Countries met yesterday to decide whether to hold production levels steady despite crude's steep decline in recent months. Prices have plunged about 30 percent since surging to a record $147.27 a barrel on July 11.
Iran and other hawkish members have been pushing the 13-member body to trim output in an effort to lift prices - or at least halt the decline. But Saudi Arabia, the cartel's largest member, and a number of other countries have been less vocal about possible cutbacks. In a strong indication of how a majority of countries are leaning, OPEC president Chakib Khelil suggested yesterday there was a consensus on production among members.
Earlier, Saudi Oil Minister Ali Naimi suggested the kingdom, which accounts for about one-third of all OPEC output, prefers not to tighten the spigots for now.