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Business News/ Opinion / Online-views/  Oil falls below $114 in Asia
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Oil falls below $114 in Asia

Oil falls below $114 in Asia

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By Alex Kennedy / AP

Singapore: Oil prices fell Tuesday in Asia to a 3-month low as a stronger dollar and weakening crude demand from China weighed on investor sentiment.

Light, sweet crude for September delivery fell 65 cents to $113.80 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

The contract lost 75 cents overnight to settle at $114.45 a barrel, the lowest close for a floor session since 1 May.

A report from China on Monday that the country’s crude oil imports in July were down 7% from last year fueled expectations that the economic slowdown affecting the US and Europe may be spreading to Asia and cutting demand for oil.

A stronger dollar is also pushing prices down. The euro fell Tuesday to $1.4879, while the dollar was holding above 110 yen.

A weak dollar helped boost oil prices earlier this year, because dollar-denominated commodities are often used as hedges against inflation and a falling US currency. But gains in the currency are reversing that trend.

In London, Brent crude for September delivery fell 78 cents to $112.04 a barrel.

Prices fell despite concerns that the widening conflict between Russia and Georgia over the breakaway province of South Ossetia could disrupt supplies in the region.

Russian forces pushed a second front deep into Georgia on Tuesday, seizing towns and a military base in the western parts of the country.

Georgian President Mikhail Saakashvili said his country had been effectively cut in half with the capture of the main east-west highway near the central city of Gori.

Nymex crude is down about $33, or 22%, from its high of $147.27 on 11 July.

In other Nymex trading, heating oil futures fell 0.75 cent to $3.112 a gallon (3.8 liters) while gasoline prices dropped 0.61 cent to $2.8605 a gallon. Natural gas futures rose 5.9 cents to $8.408 per 1,000 cubic feet.

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Published: 12 Aug 2008, 10:23 AM IST
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