Oil falls on tropical storm news

28 June 2010

Written by Neil Brunskill

Reports that Tropical Storm Alex may miss the key production areas in the Gulf of Mexico have helped to ease upward pressure on the commodity.

Crude oil prices fell to below $78 per barrel following news from the US National Hurricane Center that the storm is likely to make land in northern Mexico, rather than swinging further north in the Gulf and the core production areas.

Vice-president of energy at MF Global in New York, Michael Fitzpatrick, told Bloomberg: "It looks like it's going to skirt where most of the rigs and refineries are."

The news that suppliers will perhaps be less affected than originally anticipated helped to ease the pressure on the commodity, forcing down prices.

Heating oil followed the lead of crude and also dropped in price, sitting at $2.0861 on the New York Mercantile Exchange at 10:13 Eastern Time this morning, Bloomberg reports.

While currently a tropical storm, Alex could evolve into a hurricane, meteorologists believe.