Oil price below $88 on global growth concerns
The price of oil fell below $88 a barrel Tuesday as the impending reopening of a key pipeline in North America and concerns about slowing economic growth overcame rising Middle East supply risks.
By early afternoon in Europe, benchmark oil for December delivery was down $1.04 to $87.61 a barrel in electronic trading on the New York Mercantile Exchange after briefly venturing above $89 earlier in the day.
The contract fell $1.32 to finish at $88.73 per barrel in New York on Monday, reaching a three-week low as a major North American pipeline got set to reopen.
TransCanada is expected to soon restart its 2,100-mile (3,380-kilometer) Keystone pipeline. It was shut last Wednesday after tests showed possible safety issues. The pipeline carries about 590,000 barrels of crude per day from Canada to facilities in the U.S. Midwest.
The ongoing civil war in Syria has shown signs of escalating beyond the country's borders, keeping oil traders nervously eyeing energy supplies. Syria itself lacks vast oil reserves but a wider conflict could threaten routes through which much of the world's oil is shipped.
Mostly disappointing corporate results have weighed on markets, fueling sustained concerns about economic growth.
"The economic situation remains fairly tentative," analysts at Sucden Financial Research in London said. "We expect some further consolidation with possible correction lower in the oil market, for the short-term."
In London, Brent crude was down 56 cents to $108.88 on the ICE Futures exchange.
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Oct. 19 are expected to show a rise of 1.7 million barrels in crude oil stocks and a draw of 1 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while an update from the Energy Department's Energy Information Administration — the market benchmark — will be out Wednesday.
U.S. crude stocks stood 11 percent above their five-year average, reflecting ample supplies, Platts said.
In other energy futures trading in New York:
— Wholesale gasoline fell 2.35 cents to $2.6113 per gallon.
— Natural gas rose 1.1 cents to $3.463 per 1,000 cubic feet.
— Heating oil lost 1.82 cents to $3.0486 per gallon.
Pamela Sampson in Bangkok contributed to this report.