(AP)-Oil prices retreated to below $77 a barrel Tuesday as the dollar gained on the euro and fresh data from Europe pointed to a lethargic global economy. The downbeat news outweighed any upward pressure on prices from U.S. pipeline leaks disrupting supplies.
By early afternoon in Europe, benchmark crude for October delivery fell 55 cents to $76.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 74 cents to settle at $77.19 on Monday.
Eurostat, the EU’s statistics office, said industrial production in the eurozone was flat in July, against expectations for a modest increase, and a survey of German investor sentiment was much weaker than expected.
“The economic conditions in the eurozone remain fragile, adding further pressure to the euro and thus to the U.S. dollar-dominated markets,” said a report from Sucden Financial Research in London.
“It seems that there is modest resistance in the $78-per-barrel area for the near term, but crude oil prices remain in the ‘healthy range’ of $73-$77 per barrel.”
A stronger dollar tends to push down oil prices by making crude more expensive for investors holding other currencies.
The euro fell to $1.2840 from $1.2867 late Monday in New York.
The head of the Organization of the Petroleum Exporting Countries suggested Tuesday in Vienna that oil production would likely stay unchanged for some time.
Abdalla El-Badri said OPEC was “comfortable” with the current range of oil prices and did not want to “rock the boat” as the world recovers from the global economic downturn.
Oil prices remained supported, however, by U.S. pipeline problems.
Repair crews found the source of the leak of a 670,000-barrel-per-day pipeline that carries crude from Canada to the upper Midwest, but line owner Enbridge Energy Partners said it didn’t know when oil would begin flowing again. The supply disruption caused a sharp spike in gas prices across that region.
Enbridge also shut down a 70,000-barrel-a-day line from Westover, Ontario to New York when about a gallon of a petroleum-based product was discovered during a sewer installation project. Repair crews were working to find the source of the leak, and the company said Monday it did not know how long that line would be shut down.
Oil has traded in the $70s for most of the last year as the global economy recovers from last year’s recession. Some analysts expect strong crude demand in emerging economies such as China will offset sluggish consumption in developed countries and begin to make a dent in record U.S. supplies.
“The tide will soon be turning in the U.S. oil market,” Goldman Sachs said in a report. “We expect a draw on U.S. inventories to begin in the coming weeks, which will likely serve as a catalyst for higher crude oil prices.”
Goldman said it expects crude to trade at $92 a barrel in three months, $91 in six months and $101 in a year.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department’s Energy Information Administration — the market benchmark — will be out on Wednesday.
Data for the week ending Sept. 10 is expected to show draws of 2.25 million barrels in crude oil stocks and of 400,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading in October contracts, heating oil was down 0.46 cent at $2.1181 a gallon and gasoline shed 2.06 cents to $1.9600 a gallon. Natural gas lost 0.7 cent to $3.945 per 1,000 cubic feet.
In London, Brent crude fell 45 cents to $78.58 a barrel on the ICE Futures exchange.