Crude oil falls on signs storm will miss Gulf fields

Crude oil fell amid signs Tropical Storm Fay will miss rigs and platforms in the Gulf of Mexico, which accounts for about a fifth of U.S. production.

Royal Dutch Shell Plc and Transocean Inc. evacuated some workers as Fay, with maximum winds of about 60 miles (97 kilometers) an hour, may grow into a hurricane before striking Florida's west coast tomorrow, the National Hurricane Center said. Most Gulf output occurs off the Texas and Louisiana coasts.

"So far it looks like the storm will move over Florida and only strengthen to a low-intensity hurricane," said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. "There have been some evacuations but Fay should pass well to the east of the oil infrastructure in the Gulf of Mexico."

Crude oil for September delivery fell 90 cents, or 0.8 percent, to settle at $112.87 a barrel at 2:48 p.m. on the New York Mercantile Exchange. Futures touched $111.34 a barrel on Aug. 15, a 15-week low. Prices are up 57 percent from a year ago.

Shell said it evacuated about 360 non-essential personnel from the eastern Gulf over the past two days. Production wasn't affected, according to an e-mailed statement from Shell. Transocean, the world's largest offshore oil driller, said it evacuated 75 workers from two rigs in the Gulf and suspended drilling at one as a precaution because of the storm.

Prices have declined 23 percent from the record $147.27 a barrel reached on July 11 as the dollar rose for a fifth week against the euro and the Organization of Petroleum Exporting Countries warned of risks to world demand from the slowing global economy.

Turkey expects the Baku-Tbilisi-Ceyhan oil pipeline to open in "a few days" after repairs on the fire-damaged route are completed, Energy Minister Hilmi Guler said today. The BTC pipeline has a capacity of about 1 million barrels a day.

BP Plc, StatoilHydro ASA and partners had to cut output at oil fields in the Azeri part of the Caspian Sea after flows through BTC were suspended.

Russia said it will begin pulling its troops out of Georgian territory today after the U.S. and other Western countries pressed President Dmitry Medvedev to honor a cease-fire agreement he signed two days ago.

U.S. crude-oil, gasoline and distillate-fuel inventories fell in the week ended Aug. 8, according to an Energy Department report on Aug. 13. The report showed that U.S. fuel demand averaged 20.2 million barrels a day, down 2.8 percent from a year earlier.

"The failure to rally last week on the inventory report, the situation in Georgia and the interruption of Azerbaijani shipments makes a bearish statement," said Tim Evans, an energy analyst with Citi Futures Perspective in New York.

Hedge-fund managers and other large speculators increased their net-short position in New York crude-oil futures in the week ended Aug. 12, according to U.S. Commodity Futures Trading Commission data.

Speculative short positions, or bets prices will fall, outnumbered long positions by 9,130 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-short positions rose by 3,580 contracts, or 65 percent, from a week earlier.

Brent crude oil for October settlement declined 61 cents, or 0.5 percent, to close at $111.94 a barrel on London's ICE Futures Europe exchange.

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