Oil fell on Monday as concern eased about the threat to production in the Gulf of Mexico from Tropical Storm Alex, offsetting any support from a report showing U.S. consumer spending rose more than expected in May.
U.S. crude prices fell back after reaching an almost eight-week high above $79 earlier in the session, having settled at a seven-week high on Friday when prices jumped more than 3 percent on concerns tropical weather would disrupt supply.
Over the weekend, Alex became the first named storm of the 2010 Atlantic hurricane season. Forecasters, expecting an active season, said Alex could become a hurricane on Tuesday.
At 12:11 p.m. EDT (1611 GMT), U.S. crude for August was down 88 cents at $77.98 a barrel. It earlier rose to $79.38, the highest intraday price since May 6.
August Brent crude was down 73 cents at $77.39.
"It's profit-taking after the near two-month high and the failure to reach the $80 level," said Carsten Fritsch, an analyst at Commerzbank.
"The market is oversupplied. Given the high level of stockpiles, any supply disruptions (caused by the storm) could be met easily as long as they are short-lived."
STORM DISRUPTS SOME SUPPLY
While concern over Alex's weather threat was easing, it has caused some disruption to supplies.
Mexico closed two of its main Gulf of Mexico oil exporting terminals on Sunday as Alex moved over the Yucatan peninsula, the government said.
Shell Oil shut an undisclosed amount of output from two platforms, and BP evacuated some personnel from three Gulf of Mexico platforms.
Other companies were evacuating nonessential offshore workers as a precaution on Monday.
The U.S. National Hurricane Center said on Monday it expected Alex, to hit near the Texas-Mexico border early Thursday.
Most weather models project a north of the border hit, but the models were still shifting. Earlier Monday, most models forecast the storm would hit south of the border.
Refineries in Corpus Christi, Texas, would be closest to the projected storm path as the threat to the giant petrochemical and refining complex in the Houston area lessened on Monday.
The U.S. National Oceanic and Atmospheric Administration forecasts 14 to 23 named storms for this year's season, with eight to 14 developing into hurricanes. Three to seven of those could be major Category 3 or above hurricanes.
OPEC Secretary General Abdullah al-Badri on Sunday put the "inventory overhang" and oil held in storage on tankers at about 244 million barrels -- equal to almost three days of global oil demand.
"Many changes can still occur in the next 48 hours," said Olivier Jakob, an analyst at Petromatrix.
"But we start the week with a storm picture that should be if still a concern, a lesser one than at the end of last week."
U.S. consumer spending rose slightly more than expected in May even as savings touched their highest level in eight months, a government report showed.
Also providing some pressure to oil, the euro fell broadly as potential funding tensions in Europe this week weighed on the single currency.
After seesawing early, U.S. stocks advanced, helped by the consumer spending report. However, markets remained edgy on caution about global economic recovery.
ReutersGüncelleme Tarihi: 29 Haziran 2010, 01:35