* Oil touches three-month low as Edouard spares U.S. Gulf
* Concern of weakening demand weighs
* Iran dispute, Nigeria conflicts lend support
(Updates to reflect settlement prices, adds details on Iran
letter, MMS data, Reuters poll ahead of U.S. inventory data)
By Matthew Robinson
NEW YORK, Aug 5 (Reuters) - Oil fell below $120 per barrel
on Tuesday to touch a three-month low as Tropical Storm Edouard
hit the Texas coast without causing any major disruptions to
U.S. energy operations.
U.S. crude <CLc1> settled down $2.24 to $119.17 a barrel
after tumbling to $118.00 earlier, the lowest price since May
5. London Brent crude <LCOc1> lost $2.98 to settle at $117.70.
Edouard, the fifth tropical storm of the 2008 Atlantic
hurricane season, came ashore at the McFaddin National Wildlife
Refuge, a stop-over point for migrating birds like snow geese
halfway between High Island and Sabine Pass.
The storm caused only minor oil and natural gas outages as
it passed through the U.S. Gulf of Mexico, and companies began
to fly evacuated staff back to rigs. []
About 6 percent of crude oil and 12.3 percent of natural
gas production from the Gulf of Mexico was shut in by the
storm, the U.S. Minerals Management Service said.
[]
"Crude and products futures are sharply lower ... as
Tropical Storm Edouard is projected to do little damage,"
Addison Armstrong, analyst at Tradition Energy, wrote in a
research note.
The Louisiana Offshore Oil Port, the nation's only
deepwater oil port, said it was resuming offshore operations
and expected to offload its first tanker in over 24 hours by
early Tuesday afternoon.
The U.S. Gulf of Mexico supplies about a quarter of the
country's crude oil output and 15 percent of its natural gas.
Gulf Coast refiners make about a quarter of domestic gasoline.
The market losses extended a drop that has sent U.S. crude
from the July 11 record over $147 a barrel amid growing signs
demand in the United States and Europe has fallen due to
surging fuel costs.
Rising demand from China and other Asian countries helped
send oil on a six-year rally that sent prices up sevenfold at
their peak. Some analysts forecast prices could fall further,
however, if demand remains tepid in industrialized nations.
"(Oil could fall) to about $100 within the next month if
you keep on getting weak demand data," said Angus McPhail of
British-based investment firm Alliance Trust.
Still, analysts are eyeing ongoing tension between major
oil exporter Iran and the West over Tehran's nuclear work for
support, as well as Nigerian supply disruptions.
Iran has not answered demands by world powers to halt
nuclear activity, an Iranian official said on Tuesday, a stand
that could endanger the possibility of full talks and lead to
tighter sanctions. []
Tehran handed a letter to European Union foreign policy
chief Javier Solana in response to an offer in June by major
powers to refrain from moving to impose more U.N. penalties if
Iran froze expansion of its nuclear work.
Iran gave no concrete response to the offer but said it
would give a clear reply as soon as possible, according to
extracts obtained by Reuters. []
A Reuters poll of analysts on Tuesday forecast U.S.
government weekly inventory data to be released on Wednesday
will show a 300,000 barrel rise in crude inventories, a 2.1
million barrel rise in distillates, and a 1.2 million barrel
draw in gasoline stocks. []
(Reporting by Matthew Robinson, Robert Gibbons, and Gene
Ramos in New York; Alex Lawler and Barbara Lewis in London;
Seng Li Peng in Singapore; Editing by Marguerita Choy)
