Crude oil prices in global markets weakened on Monday as hopes rose that Hurricane Dean would spare key U.S. oil and gas facilities in the Gulf of Mexico on its path of destruction. Under the influence of this sentiment, a barrel of crude oil on the New York market fell by 87 cents to $71.11.
Under the influence of this sentiment, a barrel of crude oil on the New York market fell by 87 cents to $71.11. Meanwhile, on the London market, it weakened by 63 cents, dropping to $69.81 per barrel. Hurricane Dean, which struck the southern coast of Jamaica on Sunday, is expected to hit the Yucatan Peninsula in Mexico on Monday. Dean has so far developed into a Category Four storm, with the possibility of strengthening to the strongest, Category Five. “The market is reacting to news that Hurricane Dean is unlikely to hit key oil facilities in the U.S. Gulf of Mexico,” says Victor Shum, a strategist at the consulting firm Purvin&Gertz in Singapore.
“However, I do not believe that prices will continue to fall significantly because the fundamentals of supply and demand for oil are balanced. Nothing has really changed in that regard,” he added. “September is traditionally the peak of hurricane season, so oil markets will face further upward price pressures in the coming weeks.” In recent weeks, prices have also been pressured by concerns regarding the state of the global economy. On Friday, the U.S. Federal Reserve lowered its discount rate by half a percentage point, which somewhat alleviated investors’ fears of an economic slowdown, as this could mean a decline in demand for oil and gas.
