Oil prices climb on weaker dollar, unrest in Nigeria
NEW YORK - Oil futures ended an uneven session with a modest gain yesterday as traders awaited news that could help the market break out of a trading range that has lasted for more than two weeks. Retail gas prices, meanwhile, slipped to a national average of $4.07 a gallon.
Some investors were buying in response to another drop in the dollar. When the dollar loses ground, crude and other commodities tend to rise on their appeal as a hedge against inflation. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline has been one of the main reasons oil has nearly doubled in the past year.
But yesterday's advance was limited by concerns about the impact high prices are having on demand, and worries about Congress's increasing scrutiny of the oil market.
In a weekly report, MasterCard's SpendingPulse survey found that demand for gasoline fell 2.7 percent last week compared to the same week last year, and is off an average of 3.6 percent over the last four weeks compared to the same period in 2007.
Light, sweet crude for August delivery rose 26 cents to settle at $137.00 a barrel on the New York Mercantile Exchange.
Prices drew some support from recent production outages in Nigeria. But reports of an oil workers strike, which helped push prices higher Monday, were denied by Babatunde Ogun, president of Pengassan, the white-collar oil union in Nigeria.
"There's no strike," Ogun said.
Ogun said talks continued yesterday among his union, Chevron Corp., and government mediators in Nigeria, Africa's largest oil producer and a major US supplier.
Separately, a government-appointed mediator charged with leading a peace conference on Nigeria's oil region yesterday called for a 90-day truce in the area. On Sunday, the region's main militant group had said it will not attend the conference, but declared a unilateral cease-fire.
OPEC president Chakib Khelil insisted yesterday that oil producers saw no need to raise supply, blaming high prices on factors such as US pressure on Iran over its nuclear program and the weak dollar. Khelil's comments came days after Saudi Arabia disappointed the crude futures market by saying it would boost production less than many had hoped.
Another support for prices came from new sanctions against Iran approved by European Union nations, imposing additional financial and travel restrictions on a list of Iranian companies and experts including the country's largest bank. The 27-nation bloc stopped short of banning oil and gas exports from Iran, OPEC's second-largest producer, in response to its nuclear program plans.
Recent reports from the Energy and Transportation departments have offered concrete evidence American consumers are driving less in response to high prices. At the pump, the average price of a gallon of regular gas slipped 0.3 cent overnight to $4.07 a gallon, according to a survey of stations by AAA, the Oil Price Information Service, and Wright Express.
"We're seeing demand deterioration in the US," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. 