Oil down on sign of cooling US demand

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Oil prices fell for a fifth straight session Sept. 4 after a lower-than-expected drop in U.S. gasoline supplies fed beliefs that a cooling economy is curbing fuel demand in the world’s thirstiest consumer.

Light, sweet crude for October delivery fell $2.31 cents to $107.04 a barrel on the New York Mercantile Exchange as traders digested the Energy Information Administration report. Earlier, prices fluctuated between positive and negative territory.

On Sept. 3, prices settled 36 cents lower at $109.35 a barrel, a day after a dramatic, nearly $6 plunge in response to less damage from Hurricane Gustav than the oil industry feared.

In its weekly inventory report, the Energy Department’s EIA said U.S. gasoline stocks fell by 1 million barrels to 194.4 million barrels for the week ending Aug. 29, less than the 1.8 million-barrel drop analysts surveyed by energy research firm had Platts expected.

Meanwhile, energy output in the Gulf of Mexico began to slowly come back online after the passage of Gustav. Some oil companies in the western Gulf whose equipment wasn’t in the path of the storm began ramping up operations Sept. 3.

However, about 96 percent of oil production in the Gulf and about 92 percent of natural gas output remained shutdown as of Sept. 3, according to the U.S. Minerals Management Service, as energy firms assessed platforms, rigs and pipelines and worked to redeploy evacuated workers.

Crude has dropped about $38, or 26 percent, since surging to a record $147.27 a barrel on July 11.

—The Associated Press