Oil prices tumble to 3-month low in time of plenty

OIL FELL to a three-month low in New York as supplies were considered to be plentiful even as stockpiles were seen deepening a record pullback in the US, the biggest fuel consumer.

West Texas Intermediate futures declined 1 percent after falling 2.4 percent on Monday. While US crude inventories probably slid by 2.25 million barrels last week, petrol supplies are seen increasing by 600 000 barrels, swelling stockpiles that are also at the highest in decades, according to a

Adjusted quarterly cash flow from operations was $5.5bn. That figure was “surprisingly strong” and would limit the drop in BP shares, Jason Gammel, an analyst at Jefferies International, said. Gearing At the end of the quarter, net debt was $30.9bn, from $24.8bn a year earlier. Net debt to capital, also known as gearing, was at 24.7 percent, compared with 18.8 percent previously. The company announced a quarterly dividend of 10c a share.

BP this month gave its final estimate of all costs related to the 2010 oil spill, saying it Bloomberg survey before an Energy Information Administration report today.

Crude has slipped more than 15 percent since early June after almost doubling from a 12-year low in February as supply disruptions from Nigeria to Canada trimmed a worldwide surplus. BP, the first oil major to report second-quarter results, missed analysts’ estimates as lower prices continued to erode income and refining margins shrank.

“We still have a little bit of expected liabilities to total $61.6bn. That allowed the company to draw a line under the disaster and improve “earnings visibility” for investors, said Alex Brooks, an analyst at Canaccord Genuity Group.

BP said it would be able to balance cash flow with shareholder payouts and capital spending at an oil price of $50 to $55 a barrel next year. Benchmark Brent was trading below $45 a barrel in London. That was down from an average $47.03 in the second quarter and $63.50 a year earlier, but up from $35.21 in the first quarter of this year.

Downstream earnings fell to $1.51bn from $1.87bn. While downside room left,” Andy Sommer, an analyst at Axpo Trading in Switzerland, said. While “we are pretty balanced in that $40 (R573) to $55 range”, there “could be bearish surprises on the supply side in the coming months”.

West Texas Intermediate for September delivery dropped as much as 54 cents to $42.59 a barrel on the New York Mercantile Exchange, the lowest since April 26, and traded for $42.70 at 11.21am in London. – Bloomberg cheaper crude boosted income for BP’s refineries, margins had been contracting. Global refining margins averaged $13.80 a barrel in the quarter to June, and dropped to $10.70 a barrel this month, according to the company’s website.

At the same time, the rebound in crude prices is petering out. While there was still consensus that the worst of the oil glut was over, the International Energy Agency cautioned this month that “the road ahead is far from smooth”.

Royal Dutch Shell and Total are scheduled to publish earnings tomorrow, and Exxon Mobil and Chevron the following day. – Bloomberg