Oil pulled back slightly but remained above $70 on Tuesday as a powerful cyclone reached the coastline of Oman and shut its oil and gas export terminals.
The storm, the worst to hit Oman in 30 years, began lashing eastern coastal areas on Tuesday morning. Thousands of people have evacuated Masirah Island in the Arabian Sea. The country's 650,000 barrels per day (bpd) of crude exports have stopped, a shipping agent said, but supplies from Saudi Arabia, the world's top oil exporter, were expected to escape disruption.
At 1308 GMT London Brent crude, currently seen as the most reliable indicator of the global market, was down 17 cents at $70.23 a barrel.
Oil surged $1.33 on Monday on news the storm was headed for the energy-rich Gulf. At one stage it was equivalent to a maximum-force Category Five hurricane and the market disruptions to shipping and production.
"Cyclone Gonu is heading to the Gulf of Oman, forcing the evacuation of offshore rigs. Yet most supply is onshore and Saudi Arabia is not expected to be affected," BNP Paribas said in a research note.
"With no damage, the storm simply implies a delay of two days' worth of exports. Weather related delays are not uncommon in the Gulf area." Saudi Arabia, which lies to the west of Oman, said its main oil producing region would not be affected by the storm.
The kingdom, with oil output capacity of more than 11 million bpd, can easily offset any lost Oman supplies. Shipping agents said it was also business as usual in major exporter the United Arab Emirates. "The cyclone will not have a bigger impact," said Tetsu Emori, analyst at Mitsui Bussan Futures in Tokyo.
Dealers remain on alert for any sign of hurricanes in the Gulf of Mexico after the Atlantic storm season began on June 1, although the first of the season -- Tropical Storm Barry -- eased by the weekend, pouring rain on Florida. Traders were also waiting for the latest snapshot of US.
inventories and demand, due in government data on Wednesday, as refinery capacity is struggling to return from maintenance and glitches after the start of peak summer fuel demand. Analysts forecast gasoline stocks to have risen 1.4 million barrels last week, the fifth consecutive rise.
OPEC, which supplies a third of the world's oil, has blamed US refinery bottlenecks for pushing up the price of crude. But adequate supplies of OPEC crude should keep oil from rising much further, said the group's secretary-general.
"There is no shortage as far as crude is concerned," Abdullah al-Badri said at the Reuters Global Energy Summit in London. "I don't think the price will go to $80. There are no fundamental problems in the market."
The storm, the worst to hit Oman in 30 years, began lashing eastern coastal areas on Tuesday morning. Thousands of people have evacuated Masirah Island in the Arabian Sea. The country's 650,000 barrels per day (bpd) of crude exports have stopped, a shipping agent said, but supplies from Saudi Arabia, the world's top oil exporter, were expected to escape disruption.
At 1308 GMT London Brent crude, currently seen as the most reliable indicator of the global market, was down 17 cents at $70.23 a barrel.
Oil surged $1.33 on Monday on news the storm was headed for the energy-rich Gulf. At one stage it was equivalent to a maximum-force Category Five hurricane and the market disruptions to shipping and production.
US light crude fell 50 cents to $65.71.
"Cyclone Gonu is heading to the Gulf of Oman, forcing the evacuation of offshore rigs. Yet most supply is onshore and Saudi Arabia is not expected to be affected," BNP Paribas said in a research note.
"With no damage, the storm simply implies a delay of two days' worth of exports. Weather related delays are not uncommon in the Gulf area." Saudi Arabia, which lies to the west of Oman, said its main oil producing region would not be affected by the storm.
The kingdom, with oil output capacity of more than 11 million bpd, can easily offset any lost Oman supplies. Shipping agents said it was also business as usual in major exporter the United Arab Emirates. "The cyclone will not have a bigger impact," said Tetsu Emori, analyst at Mitsui Bussan Futures in Tokyo.
Dealers remain on alert for any sign of hurricanes in the Gulf of Mexico after the Atlantic storm season began on June 1, although the first of the season -- Tropical Storm Barry -- eased by the weekend, pouring rain on Florida. Traders were also waiting for the latest snapshot of US.
inventories and demand, due in government data on Wednesday, as refinery capacity is struggling to return from maintenance and glitches after the start of peak summer fuel demand. Analysts forecast gasoline stocks to have risen 1.4 million barrels last week, the fifth consecutive rise.
OPEC, which supplies a third of the world's oil, has blamed US refinery bottlenecks for pushing up the price of crude. But adequate supplies of OPEC crude should keep oil from rising much further, said the group's secretary-general.
"There is no shortage as far as crude is concerned," Abdullah al-Badri said at the Reuters Global Energy Summit in London. "I don't think the price will go to $80. There are no fundamental problems in the market."
