Crude Oil Falls a Fourth Day as Storm May Miss U.S. Gulf Fields

By Nesa Subrahmaniyan and Christian Schmollinger

Aug. 19 (Bloomberg) -- Crude oil fell for a fourth day in New York on forecasts Tropical Storm Fay will miss rigs and platforms in the Gulf of Mexico, which accounts for about a fifth of U.S. production.

Exxon Mobil Corp., the world's largest publicly traded oil company, said its operations weren't affected and none of its workers were evacuated. Fay made landfall over Key West, Florida, yesterday after killing about a dozen people on its path through the Caribbean while avoiding oil and gas fields in the Gulf.

``The storm worries have eased,'' said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. ``Fay is fading and not expected to cause any damage.''

Crude oil for September delivery fell as much as $1.23, or 1.1 percent, to $111.64 a barrel on the New York Mercantile Exchange, and traded at $111.99 at 2:49 p.m. Singapore time. Yesterday, the contract dropped 90 cents, or 0.8 percent, to settle at $112.87 a barrel. Futures touched $111.34 a barrel on Aug. 15, a 15-week low. Prices are up 57 percent from a year ago.

Fay was located about 45 miles (72 kilometers) south of Naples, Florida, at 2 a.m. Miami time, the National Hurricane Center said in its latest advisory. The storm is expected to be over central Florida later today.

Prices have declined 23 percent from the record $147.27 a barrel reached on July 11 as the dollar rose for a fifth week against the euro and the Organization of Petroleum Exporting Countries warned of risks to demand from slower global growth.

``The fundamentals, things like the economic leading indicators are all pointing downwards,'' said Mark Pervan, a senior commodity strategist with Australia & New Zealand Banking Group Ltd. in Melbourne in an interview with Bloomberg Television. ``That's indicating demand conditions are going to be weaker for the next six to nine months.''

Rigs Evacuated

Royal Dutch Shell Plc, Europe's biggest oil company, said in an e-mail production wasn't affected after it evacuated 425 non- essential personnel from the eastern Gulf over the past two days. Transocean Inc., the world's largest offshore oil driller, said it removed 75 workers from two rigs in the Gulf and suspended operations at one as a precaution because of the storm.

BP Plc, Azerbaijan's national oil company and other exporters halted rail transport of crude through Georgia to the Black Sea after a bridge was blown up two days ago.

Russian troops attacked a railway bridge near the Georgian village of Grakali on Aug. 16, paralyzing the country's train system, according to Interior Minister Shota Upiashvili. Russian General Staff Deputy Chief Anatoly Nogovitsyn denied his military was involved in the incident.

Demand Impact

BP and partners have also shut two main pipelines for Azeri crude because of security concerns amid an armed conflict between Russian and Georgia and after a fire damaged the Turkish stretch of a 1 million barrel-a-day link. Russia started withdrawing its troops from Georgia yesterday, a Defense Ministry official said, after President Dmitry Medvedev announced the pullout.

``This has failed to have an impact because clearly demand isn't there,'' said Purvin & Gertz's Shum. ``An economic slowdown in the U.S. is also creating worries it could spread to Europe and Asia.''

Turkey expects the Baku-Tbilisi-Ceyhan oil pipeline to open in ``a few days'' after repairs on the fire-damaged route are completed, Energy Minister Hilmi Guler said yesterday. The BTC pipeline has a capacity of about 1 million barrels a day.

U.S. crude-oil inventories probably increased last week as shipments arrive that were delayed by Tropical Storm Edouard, a Bloomberg News survey of analysts showed.

Edouard made landfall on the Texas coast on Aug. 5, packing maximum sustained winds of about 65 miles (96 kilometers) per hour, according to the National Hurricane Center. Some production platforms in the Gulf of Mexico were evacuated and several ports and refineries were shut as a precaution.

Inventory Gain

Inventories of crude oil probably rose 1 million barrels in the week ended Aug. 15 from 296.5 million, according to the median of responses by seven analysts before an Energy Department report this week. Five forecast an increase and two said there was a decline.

U.S. crude-oil, gasoline and distillate-fuel inventories fell in the week ended Aug. 8, according to an Energy Department report on Aug. 13. The report showed U.S. fuel demand averaged 20.2 million barrels a day, down 2.8 percent from a year earlier.

Brent crude oil for October settlement fell as much as $1.24, or 1.1 percent, to $110.70 a barrel on London's ICE Futures Europe exchange. It was at $111.09 a barrel at 2:55 p.m. Singapore time. The contract declined 61 cents, or 0.5 percent, to close at $111.94 a barrel yesterday.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net.