Oil Prices Rise As Tropical Storm Forms

Prices Fluctuate On Waffling Dollar And Tropical Storm Gustav Brewing In The Caribbean

(AP)  Oil prices ended a choppy session slightly higher Monday, edging back above $115 a barrel after Tropical Storm Gustav formed in the Caribbean.

Light, sweet crude for October delivery rose 52 cents to settle at $115.11 a barrel on the New York Mercantile Exchange after earlier falling as low as $113.68. Trading was light heading into the Labor Day holiday now a week away, adding to the volatility that has characterized the market in recent days, including a $12 price swing between Thursday and Friday.

At the pump, a gallon of regular gasoline shed almost a penny overnight to a national average of $3.681, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have dropped 15 cents a gallon in the last two weeks, according to the Lundberg Survey of 7,000 gas stations nationwide.

Crude traded erratically most of the day in lockstep with a wavering U.S. dollar, which has become the focal point for investors trying to figure out whether crude is going higher or lower. The greenback gained ground against the euro earlier Monday, fell back, then gained again in a span of a few hours.

A stronger dollar typically makes oil less attractive to investors who buy commodities as a hedge against inflation and weakness in the U.S. currency. But prices were supported by fears that Gustav could threaten oil and natural gas production in the Gulf of Mexico. The storm was heading for the Dominican Republic and Haiti with maximum sustained winds of near 60 mph.

"The dollar wants to pull oil lower and the storm wants to pull it higher. It's a bit of a tug-of-war right now," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

Oil's uncertainty Monday followed a round of hyper-volatile trading last week. On Friday, crude fell $6.59, or 5.4 percent, to $114.59 a barrel. It was crude's largest single-day price drop in percentage terms since Dec. 27, 2004. That decline wiped out gains from an almost $6 rally on Thursday.

Analysts said the market's inability to rally in the face of bullish news such as threats to energy supplies from a conflict between Russia and Georgia and another tropical storm suggests that crude remains in a downward trend. Crude oil has dropped about $30, or 25 percent, from record trading levels above $147 a barrel reached last month.

"From the Caribbean to the Caspian, we've had one bullish headline after another and the market cannot generate a (sustained) rally," said Stephen Schork, an analyst and oil trader in Villanova, Pa. "It certainly doesn't bode well for anyone who owns commodities."

Still, unresolved tensions between the U.S. and Russia over the conflict in Georgia could rekindle supply worries and send prices higher.

Russia pulled the bulk of its troops and tanks out Friday under a cease-fire agreement, but built up its forces in and around South Ossetia and Abkhazia, both separatist regions.

A U.S. Navy destroyer loaded with humanitarian aid reached Georgia's Black Sea port of Batumi on Sunday, a development that a Russian general suggested would worsen tensions between the former Cold War foes.

A Monday vote by Russian lawmakers unanimously asking President Dmitry Medvedev to recognize the independence of Georgia's two rebel provinces added to the concerns of energy markets.

Despite the conflict, some analysts said energy flows from Russia to the West were safe.

"We continue to see little chance for oil to be used by Russia as a bargaining tool," said Olivier Jakob of Petromatrix in Switzerland. "Oil is the weapon of last resort, not of first resort ... and it would make no sense for Russia to limit exports of crude or products to European countries."

In other Nymex trading, heating oil futures rose 2.57 cents to $3.1568 a gallon, while gasoline prices rose 1.59 cents to $2.8845 a gallon. Natural gas futures fell 3.3 cents to $7.81 per 1,000 cubic feet.

In London, October Brent crude rose 33 cents to $114.25 on the ICE Futures exchange.

[beehive21-2009]

Big Oil must be nationalized on the Planet Earth,if we are to have peace.See what happens when a few, take over a commodity ,and make you its slave ,like if they had the power or water and air,they''d grind you like Big Oil is now with help of the Governments.Notice how Obama has nothing to say about it ,the pay is in the Billions ,so they sit right down and soak it up, greedy pigs only care about themselves.We the people of the Earth have had enough and are going to fix your wagons.

[petro49l]

The Saudis think that they have it all. George W. Bush and Nancy Pelosi take their bribes to support the raising of oil prices. Hurricanes plague the Gulf of Mexico. The Coalition is battling it out with Taliban. Who could stop the price for a barrel of oil from reaching $150? U.S. Oil Companies could return to the Americas. Opportunities for cheap oil leases are on the table every where. Energy Corporations can help pay for the regeneration of rain forests throughout Central and South America.

[lostusadream]

You know folks, with all that is going on in the world today, you have to love or feel sorry for these people who at the matter of a whim rise and lower the price of oil on just mere rumour or supposed impact. They must actually get sexual enjoyment when ANYTHING will give them ANY kind or reson to raise the cost of a barrel. It has become so rediculously absurd, the stupidity of the reasons they will give. I hope all of you in control of this commodity get the true gratification you want knowing you are *** this nation, The United States, and I want to thank The Administration and The Congressional members for Allowing them to Trash this Country. It only took two hundred and Twenty two years to do it

[noloyalisti]

Oil is way too important a resource to leave in the hands of fascist oil companies who run the government. Time to run the Grand Oil Party out of our government and nationalize. Take their excess profits and use it to develop electric cars and alternative energy. As soon as possible.

[nick32708]

The oil companies don''t want to tell us how much oil they refine in the US and sell the refined gasoline to other countries. Why americans pay with their taxes and environment for refining oil for other countries. We should ask our congressmen to ban export of refined oil. The oil refined on our soil is for our use.

[beehive21-2009]

Nationalize oil now,its in the wrong hands,or else, this every hiccup increase must stop .Time to take the Bull by the horns, we Americas must prepare to kick some, but.

[lovesamerica]

I have a hangnail...will that increase the oil prices? doesn''t seem to take much...

[nick32708]

The storm has not reached Florida and the oil price increased. This is why McCain wants more oil wells in the gulf of Mexico, so they get reason to increase prices every fall. This way they don''t need to wage a war to increase oil prices.
The only solution, we all conserve energy, there is no better answer to the supply-demand economy.

[puritan9]

Next time you will hear that the oil companies are raising prices due to conservation. The global warming has been slowed, and that slow growth has hampered their investment forecast. This has resulted in negative impact on earnings per share thus causing effective losses and they have to raise prices to recuperate the difference.

[puritan9]

What, the tropical storm is going to use crude oil to gain strength and use the energy to gain greater miles per hour, or speed of rotation? This is nothing but crappy logic that the oil companies are using to raise the price of oil. The American mind has been made stupid so we believe every stupid word that the fat cats utter in support of raising prices. Its about time to stop this fear mongering. The storm will come and the storm will go. Even it a few oil rigs get blown away, which they never have, that is what they are insured. It is amazing that none of the idiotic talking heads never talk about these repeated explanations. All the possible losses from storms to loss of productivity are factored into the rig operations, the oil companies are not stupid.

[andylance1]

A new discovery in the Gulf of Mexico in deep water off Louisiana could boost US energy reserves by 50% and could be as much as 15 billion barrels. This does not even count the area off the west Florida coast.

It is also estimated the Arctic may have 1/5 of the world''s oil and natural gas reserves on the north slope of Alaska and the Arctic Ocean.

Nancy Pelosi said Monday night that oil is dangerous. She does not want to permit the kind of oil drilling necessary to reduce foreign oil imports.

We need to build new oil refineries and nuclear energy plants. We need to conserve and increase gas mileage in new cars by a larger margin. If we keep sending beau coup billions overseas the dollar won''t be worth a nickel.

[voidmaster-2009]

Tropical storm my a$$! Oil prices jumped in time to catch the Labor Day holiday.

[marcpcbs]

Oil prices soar because,

1 Oil Tycoons girl friend looses ear ring
2 Wind changes direction
3 Brown spots appear in oil tycoon%u2019s lawn
4 Spilled milk
5 Newspaper not delivered this morning
6 Oil Tycoon stubs toe
7 Too much oil demand
8 Too little oil demand
9 Oil demand just right
10 Somewhere in the world something bad could happen
11 Parking valet changed oil tycoon%u2019s radio station
12 Oil Tycoons favorite TV show was a rerun
13 Oil Tycoons shorts are riding up
14 Of a whim

[bradster999]

Appearently few readers on this forum have read the Vitol news yet. Vitol is the Swiss company that manipulated 11% of the OIL futures market. This story could spell doom for traders that try to manipulate the market in the future. There are many questions left unanswered about Vitol transactions and I predict it will open up a hornets nest.

See the article on the Washington Post website Titled "A Few Speculators Dominate Vast Market for Oil Trading"

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/20/AR2008082003898_2.html?hpid=topnews

PS: This is why gas prices are so high !!!!!!

[whitemale08]

High oil prices has to do with a fundamental problem of inflation, not hurricanes and natural disasters.

And "drill here, drill now" cannot bring prices down iflation, isn''t obvious?

If the Federal Reserve would stop printing up tons of private Federal Reserve Notes for this failed War in Iraq which causes all of this inflation through defecit spending, then oil prices would come down.

Plain and Simple.