Oil Prices Dip As Dollar Strengthens

Drop Follows News That Talks Between EU And Iran Are Moving Forward

(CBS/ AP)  Oil prices dropped sharply Monday as the dollar strengthened and Middle East tensions appeared to ease.

Light, sweet crude for August delivery fell $4.84, or about 3.3 percent, to $140.45 in morning trading on the New York Mercantile Exchange. Earlier, the contract sank as low as $140.12, or $5.17 below Thursday's settlement price. In London, August Brent crude fell $1.97 to $142.44 a barrel on the ICE Futures exchange.

After the last few weeks' run-up, however, analysts were skeptical that the drop signaled the start of a long-term decline. Prices set records in each of the last six sessions.

"We're just moving into a new and higher trading range" of about $140 to $146 a barrel, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois. "We'll probably consolidate there for a week or two ... then probably push back into new record territory."

In the U.S., record retail fuel prices edged even higher as Americans made their way home at the end of the long Independence Day weekend, typically one of the busiest driving periods of the year.

A gallon of regular gasoline now costs $4.108, a tenth of a penny more than the previous day's high, according to AAA automobile club, the Oil Price Information Service and Wright Express. Diesel is also at a record, of $4.801, up nearly a penny.

Fears that a fresh conflict in the Middle East could cut into oil supplies eased over the weekend.

Iranian state media reported Friday that EU foreign policy chief Javier Solana and Iran's top nuclear negotiator have agreed to the latest in a series of talks during the second half of July over Iran's nuclear program and the enrichment of uranium.

"The Iranian situation turned confrontational last week which raised valid concerns in the oil market (over a possible attack). Now that seems less likely and this is a positive development," said John Vautrain, an analyst with Purvin & Gertz in Singapore.

"As we look ahead to this week the bulls have their crosshairs set on $150," wrote analyst and trader Stephen Schork, in his Schork report. "At this point, that critical point of reference looks like a done deal, but time will tell."

The contract hit a trading record of $145.85 on Thursday in New York before settling at a record close of $145.29 a barrel. There was no floor trade Friday in the U.S. because of the July Fourth holiday.

OPEC President Chakib Khelil said surging oil prices aren't likely to fall amid strong demand, especially from China and India.

Khelil also told an energy conference in Algiers on Sunday the steady increases of late were unrelated to supply and demand, blaming the weak U.S. dollar, oil's primary currency of exchange. Khelil said he believes the reason the dollar has fallen against other currencies is the string of interest rate reductions over the past year to boost the American economy.

A falling dollar has helped boost oil prices around 50 percent this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.

And, despite Wall Street's longest streak of weekly losses in four years, some bright spots have emerged, says Bloomberg Television's Deirdre Bolton.

"Stocks are so cheap, analysts say it is time to buy. They believe the S & P will be up to 18 percent in January, Bolton told CBS' The Early Show.

However, Bolton cautioned, the last time the markets were this low in 2001, it took nine months to get back on track.

Reversing the trend, at least temporarily, the euro fell against the dollar Monday as markets continued to mull less-than-hawkish comments from the European Central Bank on its future interest rate course, and industrial production numbers are expected in Britain and Germany.

In other Nymex trading, heating oil futures fell by close to 12 cents to $3.9862 a gallon while gasoline futures dropped 8.3 cents to $3.489 a gallon. Natural gas futures lost 54.6 cents to fetch $13.031 per 1,000 cubic feet.

[liberalme]

Because their government drills for oil. DDUUUUHHHHH. LIBS have created this shortage for fear of losing a few spotted owls.

Posted by mbcsmith at 03:21 PM : Jul 07, 2008

This guy must be pretty used to walking around with both feet in his mouth. (sorta like Bush)

Exxon/Mobile CEO Rex Tillerson made (not earned) $21.7 million last year.

Chevrons David O''Reilly made $15.7 million last year.

The median "pay" for these bozos is $9.9 million---Come on mbsmith--lets hear again how it''s the libs---these guys HAVE to be die hard Repukes!!!

[dchu76]

Its amazing that people still place blame on the Saudis. They only provide about 5-8% of the oil America uses. US imports most of its oil from mexico an canada. Wanna balme gas prices, blame the us dollar for being so devalued. I will leave it to you to use some commensense and to decide who is to blame for the devalued dollar.

[bladan58z]

South and Central American Governments need revenue. The money would pay for new rain forests. Why not forsake the Saudis and their desert sludge? The petroleum in the Western Hemisphere is the best in the world. Soon, the Saudis will demand $200 a barrel for oil! Or is it $250?

[bladan58z]

The Saudis insist that George W. Bush renew efforts to drive the price for a barrel of oil to $200. They intend to cut production levels and instigate trouble with Iran. The Saudi sludge is over-priced. American Oil Companies do not need the wars, sabotage, and costly leases for drilling. Why not go elsewhere? Certainly, transport expenses are great from the Middle East. Other Governments offer excellent deals on leases for petroleum sites. It makes better sense to forget about George W. Bush''s war in Afghanistan and make a real profit.

[ov442]

If Oil is serfdom, are we all surfing on oil?

[ov442]

"Light, sweet crude for August delivery fell $4.84, or about 3.3 percent, to $140.45 in morning trading on the New York Mercantile Exchange. Earlier, the contract sank as low as $140.12, or $5.17 below Thursday''s settlement price."

Isnt that amazing to read?
10 yrs ago, if anyone had said, "in the near future, oil and gas will quadruple in price while under an oil baron president" people would have said... "no way... really? lets Lynch the bum!!"

[whitemale08]

Republicans wants you to pay bills (credit card bills, heating bills, power bills, insurance bills, bills for toll roads, bounce check bills, bills for parking, telephone bills, student loans, taxes) it''s serfdom

Democrats wants you to live free of bills that''s freedom, they want you to retire with no bills and if possible retire early.

The choice is simple folks.

[benissimo-2009]

Of course... the 3-day weekend is over. Why they even bother trying to justify the numbers otherwise is a total joke.

[whitemale08]

Oil is Serfdom

Alternative Energy is Freedom

Republicans want Serfdom

Democrats want Freedom

The choice is simple folks.

[vnveteran72]

Because their government drills for oil. DDUUUUHHHHH. LIBS have created this shortage for fear of losing a few spotted owls.


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Posted by mbcsmith at 03:21 PM : Jul 07, 2008
+ report abuse

Don''t give up your day job at Mickey D''s for that shot at Economist and Oil Specialist just yet, Einstein. There is NO shortage of Supply. Big Oil is a Cartel, just like Diamonds, where the Supply is so great, they would be worthless if they were not hoarded and released in controlled quantities to the retardds at a preset price. Relax and have some more Neocon KKKoolaide......Yum!!!

[mbcsmith]

Remember there are limited resources in this world. When those who have little gain more those with more lose.


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Posted by getoffmine at 03:27 PM : Jul 07, 2008


Exactly why the LIBS in Congress should allow more domestic drilling.

[mbcsmith]

Why gas in Mexico is $2.55 in american dollars?


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Posted by RealityToday at 02:45 PM : Jul 07, 2008



Because their government drills for oil. DDUUUUHHHHH. LIBS have created this shortage for fear of losing a few spotted owls.

[sistatee-2009]

The dollar "strengthens". What a fricking joke.

[rudy654-2009]

You will see that production and demand are about equal with demand rising and the supply decreasing due to the oil fields running dry.
**********

Yeah right. We''re having a real gas shortage. Odd and even days. Lines for miles to the next gas station. Right.

[ponco seno]

Want a good scare? Look up Peak Oil on Wikipedia. You will see that production and demand are about equal with demand rising and the supply decreasing due to the oil fields running dry. All the reserves in the middle east are inflated by about %100. The Saudi fields are seeing a %10 decrease annually. We are so screwed.


Posted by cbscrash07 at 02:39 PM : Jul 07, 2008




Same issue with Iran, that is the reasoning of nuclear power plants. Iran knows they will be doomed in a decade or so...

[ponco seno]

Why gas in Mexico is $2.55 in american dollars?

[Syndicate]

Want a good scare? Look up Peak Oil on Wikipedia. You will see that production and demand are about equal with demand rising and the supply decreasing due to the oil fields running dry. All the reserves in the middle east are inflated by about %100. The Saudi fields are seeing a %10 decrease annually. We are so screwed.

[acolton1]

OH thoes Douschbags at Shearson Lemon did not get what the forcast for oil to be 150 by 4th of July.

[donevis-2009]

Looks like the Stock Market will fall below the 10,000 mark pretty soon with these situations. Guess I''ll cash in my Life insurance and 401k plans ASAP. It looks like they''ll be chewed to nothing by the corporations within 3 months. Try to get something before its all gone. "God Speed USA"

[ici2i]

said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois. "We''ll probably consolidate there for a week or two ... then probably push back into new record territory."

Oh yeah right, it''s all a big mystery. Just ask Jimmy boy here. What he''s really saying to himself is ''I''m feeling like a making a few more million next week after we send it to new records again....chuckle, chuckle'' Give the guy credit, he make no bones about price manipulating; in your face!