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UPDATE 9-Oil down as U.S. storm worries fade, snuffing early rally

Published 02/10/2015, 05:54 am
UPDATE 9-Oil down as U.S. storm worries fade, snuffing early rally
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* Brent down 1.4 pct, U.S. crude off 0.8 pct

* Market reverses early gains as Hurricane Joaquin's path shifts

* Early risk premium from Syria also fades (New throughout with market settlements, additional comments)

By Barani Krishnan

NEW YORK, Oct 1 (Reuters) - Oil prices fell more than 1 percent on Thursday as the government's storm monitor altered forecasts for the path of the latest U.S. hurricane, snuffing out an early rally that was prompted by fears of storm damage to U.S. East Coast oil installations.

Heightened geopolitical risk from the worsening conflict in Syria had also boosted crude prices in Thursday's early trade. ID:nL5N1211LF

"We don't see either item as deserving of much premium given the sizable supply surplus of both crude and products that will provide cushion against any temporary supply disruptions," said Jim Ritterbusch of Ritterbusch & Associates, an oil markets consultancy in North Wabash, Chicago.

Hurricane Joaquin, which strengthened into a powerful Category 3 storm and was moving over the Bahamas, is expected to hit land about 100 miles east of New York City in eastern Long Island as a tropical storm, a revised forecast by the National Hurricane Center (NHC) showed.

Traders watch Atlantic hurricanes because the storms can lead to precautionary shutdowns of oil facilities, and in exceptional cases, like Hurricane Sandy in 2012, damage energy infrastructure.

Energy firms said they are on alert for Hurricane Joaquin but not shutting facilities yet as its forecast track was uncertain. ID:nL1N12113U

Earlier, the NHC had predicted the storm would hit the New Jersey coast and New York Harbor, home to several oil refineries, pipelines and other energy infrastructure.

"The latest update on Joaquin is bearish," said Scott Shelton, a crude broker and commodities specialist at ICAP (LONDON:IAP) in Durham, North Carolina.

Brent LCOc1 , the global benchmark for crude, settled down 68 cents, or 1.4 percent, at $47.69 a barrel, after hitting a one-week high at $49.84.

The West Texas Intermediate (WTI) benchmark for U.S. crude CLc1 finished down 35 cents, or 0.8 percent, at $44.74. At its session peak, it was up more than $2 or 4 percent.

Oil bulls bought crude in early trade as gasoline RBc1 rallied more than 3 percent on the storm fears, a broker in Houston said. But gasoline gave back those gains to settle flat. ID:nL1N1211GT

Brent and WTI have largely traded in a $5 range the past month despite price swings of up to 5 percent a day at times.

Ritterbusch, the Chicago-based market consultant, said he expected more volatility and price pressure ahead. "We continue to advise adding to existing short WTI positions on occasional price advances to above the $47 mark as seen today."

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