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Oil prices drop as dollar firms, demand jitters persist
New York (AFP) Sept 11, 2008 Oil prices tumbled Thursday as the dollar rallied and demand worries outweighed a powerful Hurricane Ike barreling through the rig-dotted Gulf of Mexico. New York's main contract, light sweet crude for October, slid 1.71 dollars to close at 100.87 dollars a barrel. The New York contract fell to 100.10 dollars in intraday trade, approaching the 100-dollar threshold it had last crossed on April 1. In London, Brent North Sea crude for delivery in October dropped 1.33 dollars to settle at 97.64 dollars a barrel on Thursday -- its lowest level since March 5. "Contracting demand and a strengthening greenback dominated participants' concerns for another day," said John Kilduff, analyst at MF Global. The dollar strengthened again against the euro, which fell below 1.39 dollars for the first time in a year amid growing recession fears in the eurozone. A strong dollar makes dollar-priced goods, such as oil, more expensive for buyers using weaker currencies. The market had a series of reports this week underlining weakening demand. The US Department of Energy (DoE) on Tuesday lowered its forecasts for 2009 global crude oil demand. On Wednesday, the DoE, in its weekly report on US energy stockpiles, said that demand for petroleum products in the United States, the world's largest consumer of crude oil, continued to fall and was now 3.8 percent below its level a year ago. Gasoline consumption declined 2.1 percent on a 12-month basis, a sharper decline than in previous weeks, while prices at the pump were far below their July peaks, the DoE said. The International Energy Agency on Wednesday cut its estimate for demand growth this year by 100,000 barrels per day and for 2009 by 140,000 bpd. With demand worries in the spotlight, the market seemed to shrug off the threat of Hurricane Ike, which swept into the Gulf of Mexico Thursday, where a quarter of US oil production and 80 percent of Mexico's is located. Oil and natural gas production in the Gulf of Mexico has been largely shut down as Hurricane Ike looms, the DoE said, adding however that the storm was likely to spare most Gulf energy installations. "Current projections show it (Ike) missing most of the Gulf's oil and gas installations and hitting the Texas coastline sometime late tomorrow (Friday)," the department said. "Some 95.9 percent of the Gulf of Mexico's 1.3 million barrels per day of oil production and 73.1 percent of its 7.4 billion cubic feet per day of natural gas production has been turned off," it said. Related Links Powering The World in the 21st Century at Energy-Daily.com
Gulf of Mexico, hub of US oil industry
New York (AFP) Sept 11, 2008The Gulf of Mexico, where Hurricane Ike churned Thursday, is a hub of the US petroleum industry where a quarter of US crude oil is produced and 40 percent of refinery capacity is concentrated. |
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