Oil fell to a three-month low on Wednesday, as lingering worries of a weak US economy continued to weigh on demand, but conflicts in Nigeria and dispute over Iran's nuclear plan could counter the bearish effects. US light crude fell by more than $1.00 to reach $118.10 a barrel, its lowest since May 5, before recovering to $118.63, down 54 cents at 0547 GMT.
This represents a drop of nearly 20 percent from mid-July's record high at more than $147. London Brent crude shed 50 cents to $117.20 a barrel. As oil prices plunged, the dollar climbed to seven-week peaks against the euro and a major currency basket on Tuesday.
"Western countries are struggling with high inflation," said Gerard Rigby of Fuel First Consulting in Sydney. Such a battle would tend to put the brakes on consumer spending. In the United States, Tropical Storm Edouard, the fifth of the 2008 Atlantic hurricane season, hit the Texas coast without causing any major disruptions to US energy operations, which also helped to squash concerns and bring prices down. The storm caused minor oil and natural gas outages as it passed through the US Gulf of Mexico, and companies began to fly evacuated staff back to rigs. Expectations of rising supplies in the United States weighed on sentiment.
MEASURED FALL "Prices will remain on the downward trend but I don't think they will fall that much, but be rangebound around $118-$120 a barrel," Rigby said.
Comments
Comments are closed.