TEHRAN (FNA)- Oil prices closed modestly lower Wednesday as the market focused on demand amid a slowing global economy and signs that OPEC is under pressure to cut supply.
New York’s main contract, light sweet crude for delivery in October, slipped 36 cents to close at 109.35 dollars a barrel after sliding almost six dollars by the close on Tuesday.
In London, Brent North Sea crude for October lost 28 cents to settle at 108.06 dollars.
Crude oil prices closed off earlier lows as the market continued to head south despite the shut-in of crude oil production and refinery outages in the Gulf of Mexico region after Hurricane Gustav made landfall Monday.
“Obviously, demand concerns are outweighing almost every other consideration. If the measurement of these concerns dates begins with crude oil’s peak on July 11th at 147.27 (dollars) then these demand calculations would be structural in nature, when in reality the actual demand shift has been only marginal, at best,” said John Kilduff, analyst at MF Global.
John Kilduff at Alaron Trading said, “Now it is clear that global demand is slowing as we have been predicting. And as we also predicted the rest of the world is feeling the effects of the economic slowdown and the rest of the world has not decoupled from the US economy and credit crisis.”
In the Gulf of Mexico, the tally of post-Gustav damage to oil and natural gas installations was still underway as the first oil production trickled back on line.
The US Department of the Interior said that nearly 5.0 percent of oil production in the Gulf of Mexico had restarted Wednesday.
The department said 95.8 percent of oil production and 91.6 percent of natural gas production remained cut. On Tuesday, all crude oil output was shut down and about 95 percent of natural gas.
Normal production in the region is 1.3 million barrels of crude a day and 210 million cubic meters of natural gas, according to the department.
The US government said Tuesday it was ready to release 250,000 barrels of strategic oil reserves to help cover supply shortfalls.
US President George W. Bush on Wednesday said that he would release reserve oil if requested by companies in the wake of Hurricane Gustav.
“Last night we got a request from a company doing business here in Louisiana and we met that request. And so oil was released from the Strategic Petroleum Reserve. And we will continue to do that upon requests by companies,” he said.
The oil market also was gearing up for Tuesday’s meeting of the Organization of the Petroleum Exporting Countries and weighing member Iran’s call for oil ministers to discuss excess supply resulting from some members exceeding their production quotas, particularly Saudi Arabia.