Oil fluctuates near US$85 a barrel'; markets cautious ahead of US elections

The price of crude oil fluctuated around US$85 a barrel Monday as investors remained cautious ahead of the U.S. presidential election and estimated how far demand for oil has dropped in the storm-stricken U.S. northeast.

By early afternoon in Europe, benchmark West Texas Intermediate crude for December delivery was up 38 cents at US$85.24 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract fell to US$84.34, its lowest point since early July.

On Friday, it slumped $2.23 to close at US$84.86 a barrel.

Traders attributed that plunge to the U.S. government’s decision to temporarily allow foreign oil tankers coming from the Gulf of Mexico to enter northeastern ports. That will help ease a fuel shortage in the areas hardest hit by superstorm Sandy, said Victor Shum, energy analyst at Purvin & Gertz in Singapore.

“Many areas affected by the storm are still struggling to get back to normal. That means demand for fuel is also lower,” Shum said.

Persistent concerns about global oil demand also weighed on prices.

“Investors are unconvinced about the recovery in the U.S. and China, the world’s biggest oil consumers, while fuel use by key consumers like Japan, France, Spain and Italy continues to drop as their economies continue to weaken,” said Michael Fitzpatrick, editor-in-chief of the Kilduff Report.

“The murky political picture in the U.S. is complicating the outlook for global recovery, as well,” he said.

Brent crude, which is used to price international varieties of oil, was down 11 cents at Us$105.57 a barrel on the ICE Futures exchange in London.

In other energy futures trading in New York, wholesale gasoline rose 1.33 cents to US$2.5869 a U.S. gallon (3.79 litres), heating oil added 0.79 cent to US$2.9553 a gallon and natural gas dropped 1.9 cents to US$3.535 per 1,000 cubic feet.