Crude loses almost $6

Prices drop as Gustav spares gulf

Crude oil prices registered substantial losses on Tuesday, 03 September, 2008 after news hit that hurricane Gustav will not hit the oil rigs at the Gulf of Mexico. Natural gas tumbled the most in more than a year, crude oil fell to a five-month low and gasoline dropped 4.2%. Nymex floor trading was closed yesterday for the Labor Day holiday.

Crude-oil futures for light sweet crude for October delivery closed at $109.71/barrel (lower by $5.71 or 5%) on the New York Mercantile Exchange. Last Prices are 52% higher than a year ago. Prices reached a high of $147 on 11 July but have dropped since then.

The International Energy Agency said that once Gustav's impact becomes clear, the IEA, together with the U.S. government, will assess whether it caused severe and prolonged damage to oil facilities.

At the currency markets on Tuesday, a sharp fall in oil prices and rising worries about the economic outlook in Europe and Asia boosted the U.S. dollar. The dollar rose to its highest in almost seven months against the euro. The dollar index, a measure of the greenback against a trade-weighted basket of currencies, was 0.9% higher at 78.02.

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 6% till date.

Against this background, prices for natural gas followed oil prices lower, with the October natural gas contract closing 68.2 cents, or 8.6%, lower at $7.261 per million British thermal units.

Prices for natural gas followed oil prices lower, with the October natural gas contract closing 68.2 cents, or 8.6%, lower at $7.261 per million British thermal units.