Crude oil prices slip further

26th July 2010, Comments 0 comments

World oil prices retreated on Monday, in line with weaker stock markets, as investor worries subsided over a storm threat to energy installations in the Gulf of Mexico.

New York's main contract, light sweet crude for delivery in September, shed 49 cents to 78.49 dollars a barrel.

Brent North Sea crude for September slid 40 cents to 77.05 dollars per barrel in early afternoon deals.

Traders digested news that Tropical storm Bonnie blew itself out in the Gulf of Mexico over the weekend, after causing disruption to shipping and oil output.

"The passage and deterioration of Tropical Storm Bonnie, which had disrupted around 50 percent of US production in the Gulf of Mexico waters last week, has relieved some market fears," said analysts at Sucden Financial Research.

"However, resumption of normal operations has been slow and has not yet reached full capacity; as of Sunday, 46 percent of oil production capacity was still off-line, according to reports."

New York oil had rallied close to 80 dollars on Friday as Bonnie swirled towards the Gulf of Mexico -- but pulled back after stress test results on Europe's banks were released.

Scepticism over European banking-sector stress tests, which have cleared all but seven European lenders, case a shadow over stock markets on Monday.

The results of the tests, published late on Friday, found that only seven European banks were under-capitalised, and by far less than expected, to face a new financial crisis.

"Stress tests on European banks turned out not to be a major market mover yet, as seven of the 91 that were tested failed but the capital required is less than feared," added Sucden analysts.

"Global equity markets held up well in subsequent trading. Good Japanese and South Korean economic data kept a positive sentiment."

Japanese exports continued to rise in June on shipments to Asia but the pace of growth was the slowest this year amid signs that recovery may be losing steam as global demand falls, data showed Monday. However, the slowdown was less sharp than economists had expected.

Exports rose 27.7 percent to 5.87 trillion yen (67 billion dollars), their seventh consecutive monthly rise, beating market expectations of a 23.1 percent increase but still below May's rise of 32.1 percent, the finance ministry said.

Imports jumped 26.1 percent to 5.18 trillion yen, led by crude oil, liquefied natural gas and non-ferrous metals.

The oil market's gains on Friday were helped by rising US equities as encouraging company earnings propelled Wall Street stocks to their best levels in a month but were pared back after the stress test results were released.

© 2010 AFP

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