BUSINESS

Rising US supplies, lower Middle East risks push oil below US$100 a barrel

10/21/2013 04:51 EDT | Updated 12/21/2013 05:12 EST
NEW YORK, N.Y. - Oil dropped below US$100 a barrel Monday for the first time since early July as U.S. supplies keep rising and the risks of disruption to Middle East shipments subside.

Benchmark crude fell $1.59, or 1.6 per cent, to close at US$99.22 on the New York Mercantile Exchange. Oil has now dropped eight per cent in October.

Brent crude, the international benchmark, dropped 30 cents to US$109.64 a barrel on the ICE Futures exchange in London.

U.S. crude oil supplies rose by four million barrels in the week ended Oct. 11, the government said Monday in a report that was delayed five days due to the partial government shutdown over budget issues. Analysts had expected a smaller increase of 2.25 million barrels. U.S. refinery output has slowed from a torrid pace over the summer, reducing demand for oil.

At 374.5 million barrels as of Oct. 11, the U.S. crude oil supply was 1.4 per cent above year-ago levels and the highest since July. The supply report for last week will be released Wednesday.

Other factors weighing on oil prices in the past weeks included the agreement to dismantle Syria's chemical weapons and apparent progress in talks between Iran and world powers.

"Can anyone remember a time where the possibility of a potential future attack on Iran did not figure into the equation of the price of oil?" wrote Phil Flynn, senior market analyst at The PRICE Futures Group, in a note to clients.

In other energy futures trading on Nymex, wholesale gasoline fell two cents to US$2.65 a U.S. gallon (3.79 litres), heating oil shed two cents to US$3.01 a gallon and natural gas dropped 10 cents to US$3.67 per 1,000 cubic feet.

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