Norwegian government ordered compulsory arbitration in the dispute and prevented a lockout that was scheduled to start on Tuesday. Futures slipped as much as 1.5% and oil for August delivery fell as much as $1.29 to $84.70 a barrel in electronic trading on the New York Mercantile Exchange.
The contract climbed by 1.8% yesterday to $85.99, the highest close since 5 July. However, oil prices are 14% less this year. Brent crude for August decreased $1.99, or 2%, to $98.33 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $13.56, down from $14.33 on Tuesday.
Other energy trading heating oil futures fell 3 cents to reach $2.72 a gallon. Wholesale gasoline fell 1.25 cents to finish at $2.75 a gallon. Natural gas fell by 14 cents to finish at $2.737 per 1,000 cubic feet.
China’s monthly crude purchases from overseas also dropped by 15% compared to May from 25.48 million in May to 21.7 million in June. China is the world’s second biggest oil consumer after the US and the People’s Republic is forced to reduce its energy consumption if the American economy slows.
US oil supplies declined for the third week as refineries processed more crude into gasoline to meet peak summer demand. According to analyst estimates, the stockpiles fell 1.38 million barrels in the seven days ended 6 July.
Refineries have also stepped up operations to 92.5% of their capacity last week, up 0.5% from the previous week. However, oil rose after a Tehran-based newspaper reported that several Iranian lawmakers plan to impose tariffs on tankers sailing through the Strait of Hormuz. Iran has also threatened to shut the strait, a transit route for about a fifth of the world’s crude shipments, in response to sanctions on its nuclear programme.
Helga Schmid, an aide to European Union foreign policy chief Catherine Ashton, and Iran’s negotiator, Ali Bagheri, will meet on 24 July in an effort to resolve the situation.