Despite Terror Alert Oil Prices Continue To Fall
LONDON - Crude oil futures fell Friday, backing off gains they made following reports of a terror alert in the Gulf region.
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A British navy official in Dubai said Coalition naval forces in the Gulf are on watch for possible terror threats to oil facilities in Saudi Arabia and Bahrain.
The official said a threat from al-Qaida last month to target Gulf oil terminals had resulted in stepped-up security and vigilance at Saudi Arabia’s Ras Tanura terminal, as well as a refinery in Bahrain.
Light, sweet crude for December was down 31 cents to $60.05 a barrel on the New York Mercantile Exchange, aftering rising as high as $60.85. Brent crude fell 1 cent to $60.76 a barrel at London’s ICE Futures exchange.
Norway’s state-controlled oil company Statoil ASA also announced Friday that the 200,000 barrel per day Snorre A and Vigdis offshore oil platforms have been restarted after defective lifeboats were upgraded to meet Norwegian safety standards.
Statoil had been forced to shut down Snorre A and the linked Vigdis platform on Oct. 13 because an industry study found defects in lifeboats essential to evacuating crew in a crisis.
Traders said speculation in the market was that prices would climb, with winter demand for heating oil and natural gas expected to buoy energy prices in coming months, but that a stream of price-positive news is needed to lift prices higher.
November heating oil fell 2 cents to $1.6801 a gallon, while unleaded gasoline fell more than half a cent to $1.5570 per gallon. Natural gas dropped 4.2 cents to $7.455 per 1,000 cubic feet.
Cold weather increases demand for both natural gas and heating oil. Heating oil is most prevalent in the U.S. Northeast, where nearly one-third of households use it as their primary heating fuel.
Tom Bentz, a trader at BNP Paribas in New York, said that movement of money from the front-month contracts to later months was partly behind the crude drop Thursday, when the contract fell $1.04 to $60.36 a barrel.
It had settled Wednesday at $61.40 a barrel, the highest close since Sept. 29, after the U.S.       Department of Energy said inventories unexpectedly shrunk last week amid the highest demand for oil products since last December.
Adding to support for crude oil prices is a growing view the Organization of Petroleum Exporting Countries will implement more of the 1.2 million barrels of output cuts announced last week than previously thought.