Oil retreats after storm hits Mexico
Sunday, 30 September 2007
NEW YORK, Sept 29 (AFP): Crude oil prices retreated yesterday after an early spike, as traders locked in gains after a storm in the Gulf of Mexico weakened as it moved ashore.
New York's main futures contract, light sweet crude for delivery in November, fell 1.22 dollars to close at 81.66 dollars per barrel. Last week New York crude hit an all-time record of 84.10 dollars. The price of London Brent crude oil Friday rocketed above 81 dollars a barrel for the first time, but settled with a loss of 86 cents at 79.17 dollars a barrel.
Prices spiked by more than two and a half dollars Thursday, with London smashing through 80 dollars for the first ever time owing to stormy weather in the rig-heavy Gulf of Mexico.
Hurricane Lorenzo barreled ashore from the Gulf of Mexico but rapidly lost its punch. Three people were reported killed in Mexico.
Downgraded to a tropical storm, Lorenzo soaked large areas of central Mexico, leading to fear of further landslides in mountainous regions.
Analysts said the record-breaking run for oil in the past week was not explained by market fundamentals, and that it appeared more speculative money was pouring in.
"Prices have seemingly moved inexplicably," said Eric Wittenauer at AG Edwards.
Wittenauer said that some see "an inflationary environment wherein the Fed (Federal Reserve) looks as though they may be willing to cut rates further," and that in that event, "it may make sense for traditional investors to hold commodities as an asset class."
The sliding dollar has also buoyed oil prices. A weak US unit makes dollar-denominated commodities cheaper for buyers with stronger currencies and therefore encourages demand.
Prices are finding "continued support from a weaker dollar and persistent concerns over global oil supplies ahead of the winter heating season," said Sucden analyst Michael Davies.
New York's main futures contract, light sweet crude for delivery in November, fell 1.22 dollars to close at 81.66 dollars per barrel. Last week New York crude hit an all-time record of 84.10 dollars. The price of London Brent crude oil Friday rocketed above 81 dollars a barrel for the first time, but settled with a loss of 86 cents at 79.17 dollars a barrel.
Prices spiked by more than two and a half dollars Thursday, with London smashing through 80 dollars for the first ever time owing to stormy weather in the rig-heavy Gulf of Mexico.
Hurricane Lorenzo barreled ashore from the Gulf of Mexico but rapidly lost its punch. Three people were reported killed in Mexico.
Downgraded to a tropical storm, Lorenzo soaked large areas of central Mexico, leading to fear of further landslides in mountainous regions.
Analysts said the record-breaking run for oil in the past week was not explained by market fundamentals, and that it appeared more speculative money was pouring in.
"Prices have seemingly moved inexplicably," said Eric Wittenauer at AG Edwards.
Wittenauer said that some see "an inflationary environment wherein the Fed (Federal Reserve) looks as though they may be willing to cut rates further," and that in that event, "it may make sense for traditional investors to hold commodities as an asset class."
The sliding dollar has also buoyed oil prices. A weak US unit makes dollar-denominated commodities cheaper for buyers with stronger currencies and therefore encourages demand.
Prices are finding "continued support from a weaker dollar and persistent concerns over global oil supplies ahead of the winter heating season," said Sucden analyst Michael Davies.