Tags: oil | crude | norway | china

Oil Falls as Norway Strike Ends, China's Imports Slip

Tuesday, 10 Jul 2012 03:42 PM

Oil prices retreated more than 2 percent on Tuesday after Norway's government ordered an end to an oil workers' strike and data that showed China imported less crude oil in June than in May.

Brent crude dropped back under $100 a barrel after Norway's government late on Monday ordered a settlement in a dispute between striking oil workers and employers. The deal prevented the cutoff of more than 2 million barrels per day (bpd) of crude oil, natural gas liquids and condensate.

Citing potential economic consequences, Oslo intervened with the strike in its third week and minutes before an industry-imposed lockout. Norwegian law allows the government to force workers back on the job to protect the industry on which much of the country's economy depends.

"The intervention (by the Norwegian government) means that a major supply disruption is prevented," Oliver Jakob, managing director at consultancy Petromatrix, wrote in a note.

China's crude imports in June sagged to 5.29 million bpd, the lowest daily rate this year and 12 percent lower than the record 6.0 million bpd in May, reinforcing concerns about slowing demand for oil even though imports were up 10.3 percent year-on-year.

Brent August crude fell $2.41 to $97.91 a barrel by 2:47 p.m. EDT (1847 GMT), having retreated as low as $97.73.

U.S. August crude tumbled $2.08 to settle at $83.91 a barrel, sliding to an $83.65 intraday low late.

Brent's premium to U.S. crude

Brent's total crude trading volume outpaced U.S. dealings by about 200,000 lots as U.S. crude turnover substantially lagged its 30-day average.

Norway avoiding a prolonged and complete production halt, "is not only pressuring oil prices today but is also bearish for the Brent/WTI spread ...," Dominick Chirichella, senior partner at Energy Management Institute in New York, said in a note.

"With the Norwegian oil strike out of the way and the possibility that progress will be made with Iran the normalization of the Brent/WTI spread should get back on track over the next week or so," Chirichella added.

Iran's Foreign Minister Ali Akbar Salehi on Monday downplayed threats by Iranian officials in recent months to block the Strait of Hormuz, the region's vital oil shipping lane, and said in an interview that Iran was ready to talk about halting 20 percent uranium enrichment if its needs for fuel were fully met.

Tough U.S.-led sanctions and a European Union (EU) embargo are forcing Iran to shut off wells, reducing production to levels last seen more than two decades ago.

Senior diplomats from the EU and Iran will meet on July 24 for technical talks on Tehran's disputed nuclear program to try to salvage diplomatic efforts to resolve the standoff that has added a geopolitical fear premium to oil prices.

 

 

 

Wall Street equities and a stronger U.S. dollar also added pressure on dollar-denominated oil.

The euro slumped to a two-year trough against the dollar after a meeting of euro zone finance ministers did not allay concerns about the region's crisis.

The U.S. Energy Information Administration cut its 2012 and 2013 world oil demand growth forecast, citing expectations for slower global economic growth.

U.S. crude should average $88 a barrel in the second half of 2012, a drop of $7 from the previous forecast, the EIA said.

Retail gasoline demand in the United States fell last week and remains lower compared to year ago, despite falling pump prices, a separate report from MasterCard said.

Tight supplies in the U.S. Northeast and at the New York Harbor, delivery point for U.S. gasoline futures, helped limit front-month losses, traders and analysts said.

U.S. heating oil futures settled 1 percent lower.

 

U.S. OIL INVENTORIES

Oil prices could receive support from weekly inventory reports expected to show U.S. crude stockpiles declined 1.2 million barrels last week.

Gasoline and distillate stocks in the world's biggest oil consumer were expected to have edged higher, a Reuters survey of analysts showed.

© 2017 Thomson/Reuters. All rights reserved.

   
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Tuesday, 10 Jul 2012 03:42 PM
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