Crude continues to drop

Prices drop by almost 8% in past one week

Crude oil prices registered losses for fifth straight day on Wednesday, 04 September, 2008 after news hit yesterday that hurricane Gustav will not hit the oil rigs at the Gulf of Mexico. Strength in the US dollar also led to softening of crude prices. Energy Department did not release the scheduled weekly inventory report today due to the Labor day holiday on Labor day.

Crude-oil futures for light sweet crude for October delivery closed at $109.35/barrel (lower by $0.36 or 0.3%) on the New York Mercantile Exchange. Prices fell to a low of $107.5 during intra day trading. Prices are 50% higher than a year ago. Prices reached a high of $147 on 11 July but have dropped since then. In the past one week, crude has shed almost 8%.

Visual assessments of facilities in the Gulf have not shown any damage to oil or natural-gas platforms yet, but it may take a full two weeks to return to full production.

At the currency markets on Wednesday, the euro fell to its lowest level since January against the dollar, notching a low of $1.4384 against the greenback earlier in the session. The British pound continued its rapid descent against the dollar, testing levels unseen since April 2006. The dollar index, gained 0.2% to 78.19. The greenback and gold tend to move in the opposite direction.

Crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the year, crude is up by 5% till date.

Against this background, October reformulated gasoline added 3.3 cents to end at $2.7668 a gallon while October heating oil closed at $3.0788 a gallon, up 0.5 cent.

Prices for natural gas were nearly unchanged. October natural gas closed at $7.264 per million British thermal units. The contract lost 8.6% yesterday.