Crude sank in Asia Wednesday as a call by the Group of Seven nations for oil producers to increase output overrode US supply disruptions due to Hurricane Isaac, analysts said.
New York's main contract, light sweet crude for October delivery, shed 37 cents to $95.96 a barrel and Brent North Sea crude for delivery in the same month slipped 36 cents to $112.22.
A call by the G7 industrial nations for oil producers to increase output interrupted a crude rally fuelled by US production facility closures due to Hurricane Isaac, said IG Markets Singapore market strategist Justin Harper.
“The G7 seem a little late in making this request on oil producers as we could see subdued demand for the second half of the year, keeping energy prices contained,” he told AFP.
G7 finance ministers said in a statement issued Tuesday that crude supply needed to be increased as higher prices posed “substantial risks” to the global economy
“We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity,” the statement, which was released by the US Treasury, stated.
The G7 statement also suggested the leading industrial democracies were ready to tap into global strategic oil reserves to keep price pressure down.
“We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied,” it said.
“We remain committed to well-functioning and transparent energy markets.”
Meanwhile, Hurricane Isaac made landfall in Louisiana and headed for New Orleans, seven years after Hurricane Katrina devastated the “Big Easy” and killed 1,800 people on the US Gulf Coast.
Isaac, which reached hurricane strength and was packing maximum sustained winds of 80 miles (130 kilometres) per hour, lashed the area with heavy rains and strong winds, as residents hunkered down.
States of emergency were also declared in Louisiana and Mississippi, allowing authorities to coordinate disaster relief and seek emergency federal funds.
US President Barack Obama urged people to take the threat seriously, warning of the possibility of major flooding and damage. -Sapa-AFP