Oil prices fell on Wednesday as a major storm that passed through the Gulf of Mexico missed the bulk of the oil and natural-gas operations in the region.
“Gordon largely turned out to be a non-event for the energy market, and if anything, the sell-the-news aspect of the tropics trade has triggered a profit-taking pullback across the space,” said Tyler Richey, co-editor of the Sevens Report.
October West Texas Intermediate crude on the New York Mercantile Exchange CLV8, -1.20% the U.S. oil benchmark, was down 89 cents, or 1.3%, to $68.98 a barrel. November Brent LCOX8, -0.96% the global benchmark, changed hands at $77.31 a barrel, down 86 cents, or 1.1%, on the ICE Futures Europe exchange.
Among the oil products, October gasoline RBV8, -1.39% fell 1.3% to $1.968 a gallon, while October heating oil HOV8, -0.66% fell 0.6% to $2.241 a gallon.
Energy Information Administration Tropical storm Gordon (now classified as a tropical depression) appeared to pass east of major oil and gas operations in the Gulf.
Expectations that Gordon would become a hurricane as it made landfall Tuesday had triggered a surge in oil prices Tuesday, with Brent briefly nearing the $80-a-barrel threshold. However, the storm ultimately “weakened considerably and deviated away from oil-producing areas,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. Gordon has since weakened to a tropical depression, according to the National Hurricane Center.
The U.S. Bureau of Safety and Environmental Enforcement reported midday Tuesday that 54 production platforms, which represent nearly 7.9% of all manned platforms in the Gulf of Mexico, had been evacuated because of the storm. About 9.2% of oil production and nearly 9.1% of natural-gas production in the Gulf has been shut in.
Prices have been bolstered in recent weeks and are likely to remain supported amid signs that Iranian crude exports are declining at a faster rate than expected, in the run up to November when U.S. sanctions on the country’s oil industry take effect.
OPEC, whose de facto leader is Saudi Arabia, and Russia agreed in late June to begin ramping up crude production after more than a year of holding back output. A Bloomberg survey this week showed that OPEC output rose in August to 32.74 million barrels a day—the highest level this year—up 420,000 barrels a day from July.
And on the other side of the ledger, “Chinese demand fears may be a factor finally exerting downward pressure on oil prices. In recent months, metal prices [as an indicator for other commodities] have tanked mainly on concerns over slower demand from China,” said Fawad Razaqzada, market analyst at Forex.com.
“In part, this is because of the U.S. dollar’s strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated DXY, -0.17% commodities,” he added. On Wednesday, however, the benchmark ICE U.S. Dollar Index eased back by 0.3% to trade nearly flat for the week.
Looking ahead, oil traders await weekly updates on U.S. petroleum supplies. Industry group the American Petroleum Institute will release its figures late Wednesday, with the closely watched Energy Information Administration report due Thursday. Both reports were delayed by a day this week because of Monday’s Labor Day holiday.
Natural-gas prices, meanwhile, traded mostly flat ahead of an EIA update on U.S. supplies that’s due Thursday. October natural gas NGV18, -0.14% traded at $2.823 per million British thermal units, down less than 0.05%.
—Christopher Alessi contributed to this article
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