Oil prices tumble on demand worries
NEW YORK (AFP) — Crude oil prices tumbled Monday as demand concerns climbed and a tropical storm looked set to miss energy installations in the Gulf of Mexico.
Prices slumped below 120 dollars a barrel in New York and London for the first time in three months.
New York's main contract, light sweet crude for September, fell 3.69 dollars to close at 121.41 dollars a barrel.
In London, Brent North Sea crude for September delivery dropped 3.50 dollars to settle at 120.68 dollars.
Crude oil prices fell despite rising geopolitical tensions over Iran's disputed nuclear program and Tropical Storm Edouard, which was forecast to make landfall Tuesday packing hurricane-force winds.
The US government reported US consumer spending, which fuels two-thirds of output, had cooled in June and inflationary pressures accelerated.
The problems in the world's largest economy -- and also biggest energy consumer -- are weighing on global growth, thus on demand projections.
"Slowing demand and the hope for more supply is weighing on the market even as the geopolitics and the weather is getting wild," said Phil Flynn, analyst at Alaron Trading.
Mike Fitzpatrick, analyst at MF Global, agreed.
"Despite all these bullish inferences a lower market must mean that participants have an infinitely greater concern about a deteriorating global economy," Fitzpatrick said.
Tensions over Iran's nuclear program surged after Iran missed a deadline over the weekend to respond to an international package of incentives aimed at persuading Tehran to freeze uranium enrichment.
The US State Department said Monday that it and the five other powers holding nuclear talks with Iran had threatened to pursue new punitive action against Tehran.
Tehran has refused to suspend uranium enrichment it says is aimed solely at producing fuel for nuclear power production.
The United States and its allies fear the program is a cover for developing nuclear weapons.
The United Nations has imposed three sets of sanctions against Iran over the dispute and is mulling a fourth round of measures.
Iran is the world's fourth-biggest crude oil producer and traders fear supply disruptions from the Islamic republic if tensions heighten over its controversial nuclear program.
The price of oil in New York has fallen more than 25 dollars a barrel since the futures contract reached a record-high 147.27 dollars a barrel on July in part due to tensions over Iran.
Traders meanwhile kept a watch on Tropical Storm Edouard, which was expected to make landfall by midday Tuesday around the border of Texas and Louisiana, according to the National Hurricane Center.
The storm was not seen as a threat to oil installations but oil industry operators in the crucial US petroleum industry hub said they were taking safety precautions as the storm neared.
Anglo-Dutch energy group Royal Dutch Shell said it would begin to evacuate about 40 staff from the area.
"Given the forecast for Tropical Storm Edouard, Shell will begin limited evacuations of approximately 40 personnel from some of its Gulf of Mexico West operations area today," the company said.
"No further evacuations are planned at this time and based on current information and forecast, we do not expect any impact on Shell operated production in the Gulf of Mexico."
ExxonMobil said that it was monitoring the storm to see if evacuations would be necessary.
