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Crude prices fell Thursday (Aug. 3) as Tropical Storm Chris weakened and eased concerns about a potential threat to oil installations in the Gulf of Mexico.
CBS MarketWatch reported that light sweet crude for September delivery fell 35 cents to settle at $75.46 a barrel in electronic trading on the New York Mercantile Exchange. On London’s ICE Futures exchange, September Brent crude fell 33 cents to $76.56 a barrel.
“The fact that the tropical storm is probably not going to strike the U.S. mainland is the main reason,” behind the fall in crude, according to Jim Wyckoff, analyst at TradingEducation.com. “But in the three days of trading prior to today’s session, we saw a very good run-up and we’re just seeing a corrective pullback.”
Tropical Storm Chris is likely to “weaken to a depression later today,” according to the National Hurricane Center, in its latest update. Energy prices had risen in previous sessions on fears the storm could be upgraded to a hurricane.
In another positive development on the supply side, the Russian Energy Ministry reported a rise in oil output, UBS said in its daily oil note. The average daily crude production in the first seven months of 2006 was 9.684 million barrels a day compared with 9.342 million barrels a day a year earlier.
Nevertheless, the market is still “pretty strong, technically,” said Wyckoff.
“On a shorter-term basis look for crude to trade between this week’s low of $72.77 and the high of $76.50. The caveat is if we see an escalation in Middle East tensions, that’s going to put some more premium back into the oil market.”