GO
Loading...

UPDATE 3-Brent dips to just above $109, Sandy knocks oil demand

* Sandy lands just south of Atlantic City, New Jersey

* Storm forces two-thirds of U.S. East Coast refineries to shut

* Buzzard restart delayed for another few days

* Coming Up: U.S. API weekly oil stocks; 2030 GMT

(Recasts, updates prices)

SINGAPORE, Oct 30 (Reuters) - Brent crude hovered above $109 a barrel on Tuesday as investors watched for any impact on markets from huge storm Sandy, which crashed ashore on the U.S. East Coast, closing refineries, roads and airports.

Brent crude for December edged lower for a second session to $109.28 a barrel, down 16 cents by 0740 GMT. U.S. crude for December inched down 6 cents to $85.48.

Brent slipped below $109 earlier in the day, but pared losses after the U.S. dollar softened against major currencies in subdued global markets with the closure of New York stock exchanges. A weaker greenback makes dollar-denominated oil more affordable for holders of other currencies.

U.S. gasoline futures fell 0.73 percent to $2.7368 a gallon, after climbing more than 5 cents on Monday on expectations of tighter supply. But the demand outlook dimmed as Sandy battered the U.S. East Coast, prompting the closure of air, ship, rail and even highway services, and knocked out power to more than 2.8 million homes and businesses in the region.

``People can't go out, they can't use, they can't consume,'' said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm. ``Crude inventories are running pretty high, 11-12 percent above a 5-year average.''

``The only area of concern is if the refineries are going to be knocked out for a period of time,'' Barratt said, but added this would be a rare event as operators were prepared for the storm.

Fuel supply into the region almost ground to a halt as Sandy, one of the biggest storms ever to hit the United States, forced the closure of two-thirds of the region's refineries, its biggest pipeline, and most major ports.

Sandy will close U.S. stock markets for a second day on Tuesday, as Wall Street turned its attention to whether markets would be able to resume functioning for the month's final trading day on Wednesday.

The American Petroleum Institute said on Monday it had not yet delayed the release of its weekly petroleum stocks report, but would continue to assess conditions.

Analysts, in a preliminary poll by Reuters, expect U.S. crude inventories to rise by 1.5 million barrels for the week ended Oct. 26.

``We're not going to see much ease-up on imports into the U.S. Gulf,'' said Carl Larry, president of Oil Outlooks and Opinions in the United States, adding that Saudi Aramco was busy getting ready to restart its Port Arthur refinery.

Speculators have cut net long positions in Brent crude oil and gasoil futures and options after three weeks of increases, data from the IntercontinentalExchange (ICE) showed, as an impending restart at Britain's largest oilfield Buzzard cooled prices.

But Buzzard's restart has again slipped by a few more days from Monday and this could delay shipments.

(Reporting by Florence Tan; Editing by Clarence Fernandez and Ed Davies)