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Oil lower as Hurricane Dean veers from US coast

Oil lower as Hurricane Dean veers from US coast
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First Published: Mon, Aug 20 2007. 09 29 AM IST
Updated: Mon, Aug 20 2007. 09 29 AM IST
AFP
Singapore: Oil prices fell in Asian trade Monday, 20 August, as energy facilities in the US appeared to be safe for the time being from the fury of Hurricane Dean, dealers said.
At 10:20am (0220 GMT), New York’s main contract, light sweet crude for September delivery had fallen 82 cents to $71.16 a barrel from $71.98 in late US trades Friday.
Brent North Sea crude for October delivery dropped 92 cents to $69.52.
“Its trajectory is proving to be a far way south... it’s becoming less of a worry for the oil market,” said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
“As the hurricane (threat) fades, they are focusing on the market turmoil,” he said, referring to last week’s turbulence in the financial markets, particularly equities, stemming from the troubled US subprime mortgage sector.
The US Federal Reserve’s move to slash its discount rate also calmed financial markets but there is still a “question mark over demand for oil,” said Gorey.
Oil traders are still trying to determine the fallout from the US subprime market crisis on economic growth which will subsequently affect energy demand, he said.
In a move aimed at boosting the liquidity of commercial banks, the US central bank on Friday slashed its discount rate — the short-term loan rate it charges banks — by a half-percentage point to 5.75%.
Meanwhile, Hurricane Dean unleashed the full force of its 230 kilometers (145 miles) per hour winds on Jamaica Sunday, after leaving a trail of destruction in the Caribbean where it killed at least five people.
The US National Hurricane Center in its latest report at 0000 GMT placed Dean 115km (70 miles) southwest of the Jamaican capital, Kingston, and 425km (265 miles) southeast of the Caymans, and moving west at about 20 miles (32 km) an hour.
It holds the potential to become a category five hurricane in the northwestern Caribbean sea on Monday — the top strength on the scale.
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First Published: Mon, Aug 20 2007. 09 29 AM IST