* Oil touches three-month low as Edouard spares U.S. Gulf
* Concern of weakening demand weighs
* Iran dispute, Nigeria conflicts lend support
(Adds market reaction to Fed decision in graphs 12-13, adds
details on Iran, Nigeria)
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 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 Gulf of Mexico crude oil and 12.3
percent of natural gas production 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.
Traders said oil was not greatly impacted by the Federal
Reserve's decision to hold U.S. interest rates steady, after a
series of cuts since the second half of 2007 sparked buying
from investors hedging against inflation and the weak dollar.
"The oil market is off on its own little world," said
Truman Arnold trader Tom Knight.
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 delivered a letter to world powers on Tuesday but gave
no concrete reply to a demand to freeze its nuclear activity, a
defiant step that the United States has warned could lead to
more sanctions. []
OPEC member Nigeria is losing an average of 650,000 barrels
of crude production per day to militant attacks and security
concerns in the Niger Delta, according to the government.
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)
