Oil prices drop as Middle East shipments enjoy stability

Oct 21 2013 - 2:55pm

Images

Oil tanker Takaoka is anchored at a port in Kawasaki, southwest of Tokyo Monday, Oct. 21, 2013. Japan's trade deficit ballooned to a fresh record for September as costs for imports of food and other necessities outstripped growth in exports. Imports of oil and gas accounted for nearly a third of the total but fell 1 percent as oil prices moderated. (AP Photo/Koji Sasahara)
Oil tanker Takaoka is anchored at a port in Kawasaki, southwest of Tokyo Monday, Oct. 21, 2013. Japan's trade deficit ballooned to a fresh record for September as costs for imports of food and other necessities outstripped growth in exports. Imports of oil and gas accounted for nearly a third of the total but fell 1 percent as oil prices moderated. (AP Photo/Koji Sasahara)

NEW YORK -- Oil dropped below $100 a barrel Monday for the first time since early July as U.S. supplies keep rising and the risks of disruption to Middle East shipments subside.

Benchmark crude fell $1.59, or 1.6 percent, to close at $99.22 on the New York Mercantile Exchange. Oil has now dropped 8 percent in the month of October.

The nation's crude oil supplies rose by 4 million barrels in the week ended Oct. 11, the government said Monday, in a report that was delayed five days due to the government shutdown. Analyst expected a smaller increase of 2.25 million barrels. U.S. refinery output has slowed from a torrid pace over the summer, reducing demand for oil.

At 374.5 million barrels, the nation's crude oil supply was 1.4 percent above year-ago levels and the highest since July, as of Oct. 11. The supply report for last week will be released Wednesday.

Other factors weighing on oil prices in the past weeks include the agreement to dismantle Syria's chemical weapons and apparent progress between Iran and world powers.

"Can anyone remember a time where the possibility of a potential future attack on Iran did not figure into the equation of the price of oil?" wrote Phil Flynn, senior market analyst at The PRICE Futures Group, in a note to clients.

Meanwhile, drivers in many areas in the U.S. continue to enjoy cheaper gas prices compared with a few weeks ago. The average price for a gallon of gasoline remains at $3.35. A month ago the average was $3.49. It was $3.68 at this time last year.

Brent crude, the international benchmark, dropped 30 cents to $109.64 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

- Wholesale gasoline fell 2 cents to $2.65 a gallon.

- Natural gas dropped 10 cents to $3.67 per 1,000 cubic feet.

- Heating oil shed 2 cents to $3.01 a gallon.

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