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updated: 8/28/2012 7:05 AM

Oil down slightly after storm forecast downgrade

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  • Early morning sunlight illuminates fuel storage tanks at a North Little Rock, Ark., petroleum distributorship.

      Early morning sunlight illuminates fuel storage tanks at a North Little Rock, Ark., petroleum distributorship.
    Associated Press

 
Associated Press

BANGKOK -- Oil prices remained stable Tuesday as the threat to production in the Gulf of Mexico from Tropical Storm Isaac appeared to lessen.

Forecasts for Isaac have been toned down, easing concerns that the storm could damage key oil and gas operations along the U.S. Gulf Coast.

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Weather forecasters now say the storm will grow to a Category 1 hurricane instead of a stronger Category 2.

Although the storm isn't expected to damage refineries, refinery owners often shut down operations in advance of a storm. The refineries will likely stay off line for about three days.

Benchmark oil for October delivery was down 5 cents in midday Bangkok time to $95.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 68 cents to end the day at $95.47 in New York on Monday.

In London, Brent crude rose 22 cents to $112.48 a barrel on the ICE Futures exchange.

"It seems unlikely there would be any damage to any of the Gulf facilities. That's a relief. So we're mainly seeing prices coming down as a consequence of that," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Oil has moderated of late amid speculation that the Obama administration will release oil from the Strategic Petroleum Reserve, the nation's emergency stockpile of oil.

The White House has said a release is one option to combatting higher oil prices.

Oil was previously released from the SPR to offset price spikes due to the loss of oil production in Libya last year and after Hurricane Katrina battered the Gulf Coast in 2005.

In other energy trading natural gas rose marginally to $2.66 per 1,000 cubic feet. Heating oil rose less than a penny to $3.12 a gallon.

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