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Crude oil falls below $113 as demand growth eases

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Crude oil falls below $113 as demand growth eases

Tropical Storm Fay not expected to affect Gulf of Mexico supply

ASSOCIATED PRESS
August 19, 2008

Crude prices dropped below $113 a barrel Monday as Tropical Storm Fay swirled toward Florida but appeared unlikely to disrupt oil installations in the Gulf of Mexico.

Light, sweet crude for September delivery fell 90 cents to settle at $112.87 on the New York Mercantile Exchange. The contract has fallen 23% from its trading record of $147.27, set July 11.

Fay, the sixth named storm of the 2008 Atlantic season, was expected to near hurricane strength as it approached the Keys later Monday, but it appeared not to pose a threat to oil platforms in the Gulf, forecasters said.

Royal Dutch Shell PLC said it evacuated 425 workers from the region as a precaution but said it will redeploy them if the storm remains on its current track. So far during this year’s hurricane season in the Atlantic Ocean, no storm has significantly damaged oil installations.

“Fay looks like it will be far removed from major oil-producing areas, but until it’s better defined we should still see some volatility in the market,” said Jim Ritterbusch, president of energy consultancy Ritterbusch & Associates.

A slightly weaker dollar kept oil prices from slipping further. A falling dollar typically pushes oil prices higher as investors buy crude and other commodities as hedges against inflation.

Still, analysts said that if the dollar’s rising trend continued in coming weeks and months, it likely would limit gains in oil prices.

A forecast from the Organization of Petroleum Exporting Countries on Friday of lower global oil-demand growth helped to keep prices from rising higher.

In its monthly oil report, the organization forecast world appetite for oil this year would grow by one million barrels a day, a reduction of 30,000 barrels a day from its previous forecast for demand growth for 2008. It also said growth for 2009 will be 900,000 barrels a day, which it said would be the lowest growth in world demand since 2002.

Demand growth from the major industrialized countries will actually decline, OPEC said.

“It’s another signal that conditions are easing,” said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.

http://online.wsj.com/article/SB121909733102051027.html

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