By Nicole Friedman
NEW YORK--Oil prices traded near flat Monday as traders
continued to focus more on tepid demand than on unrest in various
geopolitical hot spots.
Light, sweet crude for September delivery recently fell a penny
to $97.87 a barrel on the New York Mercantile Exchange. Brent crude
on ICE Futures Europe rose 6 cents, or 0.1%, to $104.90 a
barrel.
U.S. prices posted their largest weekly decline last week since
January, after a refinery in Kansas shut down for up to four weeks
following a fire. The refinery buys oil from Cushing, Okla., a key
storage hub where supplies have been unusually low this summer,
which has boosted prices. Reduced demand for oil from Cushing due
to the refinery outage "certainly helps to mitigate the draws at
Cushing," said Morgan Stanley in a note Monday.
Two pipelines are set to open this fall to ship oil from the
northern U.S. and Canada into Cushing, which could also increase
supplies there, the bank noted.
Speculative traders, including hedge funds, pension funds and
managed-money funds, took on record-high bets on rising U.S. and
global oil prices last month after an insurgency broke out in Iraq,
prompting fears of a large supply disruption.
Now those traders may be closing out their bets, pushing prices
lower, analysts said.
"The price slide is doubtless attributable to the withdrawal of
financial investors," said Commerzbank in a note Monday.
Brent, the global benchmark, is trading near its lowest price
for the year. Despite violence in the Iraq, Ukraine, Libya and
elsewhere, oil supplies remain ample, and demand from European and
Asian refineries has been low. "The downside price acceleration
seen last week appears to have significant room to run on a
combination of [technical factors], a broad-based reduction in risk
appetite and a growing awareness that major geopolitical issues
such as the Ukraine, Gaza, Libya, Syria, Iraq, etc., are not making
a dent in crude production or exports," said energy-advisory firm
Ritterbusch Associates in a note Monday.
Front-month September reformulated gasoline blendstock, or RBOB,
recently fell 1.11 cents, or 0.4%, to $2.7329 a gallon. September
diesel rose 0.77 cent, or 0.3%, to $2.8738 a gallon.
Write to Nicole Friedman at nicole.friedman@wsj.com
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