Oil Prices Fall as U.S. Jobless Rate Rises
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Demand destruction and the strength of the dollar are tailor-made to send oil prices lower. If it weren’t for the active hurricane season, prices would be below $100.
Crude oil for October delivery fell $1.66, or 1.5 percent, to settle at $106.23 a barrel at 2:46 p.m. on the New York Mercantile Exchange, the lowest close since April 4. Oil has dropped six straight days, the longest stretch since April 30, 2007, through May 7, 2007. Prices are 41 percent higher than a year ago.
Gasoline for October delivery dropped 5.43 cents, or 2 percent, to $2.6861 a gallon in New York, the lowest settlement price since April 1. Heating oil slumped 4.09 cents, or 1.4 percent, to settle at $2.9828 a gallon, the lowest since April 3.
Investors looking for hedge against the dollar’s decline earlier this year helped lead crude oil, gold, corn and gasoline to records. The situation reversed over the past month as the dollar rallied against the euro.
The dollar traded at $1.4241 against the euro, compared with $1.4325 yesterday. It reached $1.4196 before, the strongest since Oct. 24.
T he Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world’s oil is scheduled to meet on September 9 in Vienna to discuss output and prices. Venezuela and Iran have already made calls to trim supply because prices have dropped 28 percent from the record $147.27 reached July 11.
Saudi Arabia, the world’s biggest oil producer and OPEC’s most influential member, hasn’t said what its position on production will be at the meeting. The desert kingdom decided to unilaterally raise output by 500,000 barrels a day during June and July to curb the rise in oil prices.
Hurricane Ike, located about 425 miles (683 kilometers) north of the Leeward Islands, has maximum sustained winds of 120 miles per hour, making it a Category 3 storm. The hurricane may enter the Gulf of Mexico by the middle of next week.
The Louisiana Offshore Oil Port (LOOP), the biggest U.S. oil-import terminal, has announced that it resumed offloading of oil tankers recently. The offshore terminal was shut on August 30, and LOOP stopped shipments from its onshore operations Aug. 31 because of the approach of Gustav.
Royal Dutch Shell Plc, the largest oil producer in the Gulf of Mexico, reported light to moderate damage to equipment at three fields because of Gustav.
Continental Airlines Inc. has declared that it will charge some coach customers $15 for the first checked bag to help counterpunch rising fuel costs. The move adds to the number of fees and price increases carriers are tacking on to cover a 49 percent jump in the cost of jet fuel, the industry’s greatest expense, during the past year.
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