Oil dips under $61, traders weigh demand vs winter
SEOUL, Oct 31 (Reuters): Oil fell below $61 a barrel today but was mired in its recent range, with traders torn between the looming spike in winter fuel demand and the potential for high energy costs to curb consumption.
News Friday of robust third-quarter economic growth in the United States and a pick-up in Chinese energy use in September helped support prices, but raders kept a high alert for any softening in demand that would ease global supply strains.
US crude slipped 37 cents to $60.85 a barrel, reversing Friday's mild gain but remaining planted in last week's $60.50- $62.50 closing range.
Prices are down 14 per cent from their record high of $70.85 a barrel two months ago. London Brent crude was down 42 cents at $59.00 a barrel.
The northern hemisphere winter is dawning at a difficult time for the US oil industry, with refiners and producers still struggling to restore operations after being battered by a succession of Gulf of Mexico hurricanes.
Lost refinery output and high natural gas prices have led to concerns in some quarter that Americans could run short of heating fuel, especially if conditions turn chilly quickly.
Production from the Gulf region, home to more than a quarter of US domestic supply, will not fully recover until the end of March due to extensive damage to platforms and undersea pipelines, said the US Department of Interior.
Offsetting worries over tight supplies is the fear that record-high energy prices are curtailing fuel demand, especially in the world's top consumer, the United States.
But many analysts are wary of the "demand destruction" argument, pointing to data from oil giants such as Exxon Mobil Corp., which reported Friday a 1.2 per cent rise in third- quarter US product sales versus a year ago.
Oil traders are also monitoring a strike threat at Europe's largest refinery, Shell's 418,000-bpd Pernis plant in Rotterdam, where workers have said they would walk out Monday afternoon if the management failed to meet their pension demands.
Disruptions to the refinery's operations will have a big impact on the market by reducing the supply of distillates and fuel ahead of winter, traders said.