Oil prices drop as storm threat eases on U.S. Gulf coast

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell on Wednesday, partly reversing a strong jump from the previous day, as the impact of a tropical storm on U.S. Gulf coast production was not as strong as initially expected.

U.S. West Texas Intermediate (WTI) crude futures () were at $69.34 per barrel at 0036 GMT, down 53 cents, or 0.8 percent, from their last settlement.

International Brent crude futures () fell 34 cents, or 0.4 percent, to $77.83 a barrel.

Prices jumped the previous day as dozens of U.S. oil and gas platforms in the Gulf of Mexico were shut in anticipation of tropical storm Gordon hitting the region.

But the storm was shifting eastward late on Tuesday, reducing its threat to producers on the western side of the Gulf and most Gulf Coast refineries.

Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA, said many crude futures traders were “caught long and wrong over the past 24 hours due to tropical storm buying frenzy”, adding that “prices pulled back considerably as the magnitude of the storm suggests production losses will be limited.”

There was also a typhoon hitting Japan’s east coast overnight, with some damage to oil refineries in the Osaka region, although operator JXTG (T:) said its operations were not significantly affected.

Innes said the price outlook for crude was still bullish, in large part because of U.S. sanctions targeting Iran’s oil sector from November.

“With the anticipation of up to 1.5 million barrels per day affected by the U.S. sanctions on Iran, one would expect prices to move higher in the weeks ahead.”

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