Oil prices closed below $104 a barrel Tuesday (Sept. 9) for the first time since early April as traders bet that Hurricane Ike would miss critical Gulf Coast oil installations and in Vienna, Austria, OPEC’s president signaled the cartel wouldn’t cut production.
The Associated Press reported that light, sweet crude for October delivery fell $3.08 to settle at $103.26 on the New York Mercantile Exchange, the lowest settlement price since April 1. The contract rose 11 cents to settle at $106.34 in volatile trading Monday.
In aftermarket trading Tuesday, prices tumbled more than $4 a barrel to a new five-month low of $101.85.
Crude’s decline puts the contract within striking distance of the psychologically important $100 threshold, a level first reached on Feb. 19.
“It looks like a total exodus out of the market right now,” said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. “Now that Ike and OPEC don’t look like threats to supply, the market is running out of reasons to remain strong.”
Ike roared ashore south of the Cuban capital of Havana early Tuesday after shifting course overnight on a track that could hit anywhere from northern Mexico to Corpus Christi, Texas – well south of major oil and natural gas installations in the Gulf of Mexico. The storm also weakened Monday from a Category 3 storm to a Category 1.
“All of the signals are that this hurricane will be a miss as far as infrastructure goes, so that should keep us moving toward $100 a barrel,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
Oil market traders were also keeping a close watch on an OPEC meeting in Vienna.
Oil ministers from the Organization of Petroleum Exporting Countries meet Tuesday to decide whether to hold production levels steady despite crude’s steep decline in recent months. Prices have plunged about 30 percent since surging to a record $147.27 a barrel on July 11.
In a strong indication of how a majority of countries are leaning, OPEC President Chakib Khelil suggested Tuesday there was a consensus on production among members.
“We will probably stay at the (present) level,” Khelil, also Algeria’s oil minister, told reporters.