Supply drop helps push oil prices down

Crude oil prices were down on Monday as global demand slowdowns seem to be offsetting supply breakdowns due to Hurricane Katrina. The cuts in demand are attributed to continuing high prices for oil and oil products, and are not occurring only in the US, but throughout the world.

The International Energy Agency has cut its prediction for demand growth in China this year by 100,000 barrels per day to 220,000 barrels per day, while last week it cut its forecasts for demand growth globally.

Still, supplies of gasoline and distillates in the US are expected to remain despite lower demand as Gulf Coast refineries work to get back into production as the winter approaches with its peak demand time for heating oil.

October heating oil futures on the New York Mercantile Exchange were down 8 cents on the day to $1.81 per gallon, however, and October gasoline futures dropped 9 cents to $1.87 per gallon. Natural gas lost 23 cents to $11.03 per million British thermal units.

West Texas Intermediate crude oil contracts for November on Nymex had dropped 74 cents by the close of the trading day to $63.34 per barrel, 10.5 percent lower than it was on August 30, the day after Hurricane Katrina hit the Gulf Coast. In early afternoon trading, WTI had been down as much as $1.43 to $62.65 per barrel.

Meanwhile, in late afternoon trading on the International Petroleum Exchange in London, Brent crude October contracts were down $1.61 to $61.23 per barrel, 11 percent lower than it was on August 30.