Oil drops on hurricane direction
Dolly expected to miss derricks; crude falls $3.09
NEW YORK - Crude oil fell more than $3 a barrel, dropping to a six-week low, on forecasts a hurricane in the Gulf of Mexico will miss oil installations. Also, the dollar gained versus the euro, reducing the appeal of commodities.
Oil dropped below $126 a barrel, down more than $21 from a record $147.27 on July 11, as Hurricane Dolly moved toward the Texas border with Mexico. The dollar rose on signs that US interest rates may increase. Senate Democrats yesterday cleared the first hurdle for legislation that aims to curb speculation in energy markets.
"There are dual causes to today's move lower," said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Ky. "There's a strong move by the dollar, which always puts pressure on energy prices. We aren't worried about Dolly anymore, also putting pressure on prices."
Crude oil for August delivery fell $3.09, or 2.4 percent, to settle at $127.95 a barrel on the New York Mercantile Exchange, the lowest settlement price since June 5. Futures are up 69 percent from a year ago. The August contract expired yesterday. The more-active September contract declined $3.40, or 2.6 percent, to settle at $128.42 a barrel.
The number of outstanding oil futures in New York dropped to the lowest in 17 months as oil companies, refiners, and institutional investors exited the market. Open interest fell 2.6 percent yesterday to 1.23 million contracts on the Nymex, according to data from the exchange.
Gasoline for August delivery fell 7.01 cents, or 2.2 percent, to $3.15 a gallon in New York, the lowest close since May 8. Futures reached a record $3.63 a gallon on July 11.
Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 1.4 cents to $4.06 a gallon, AAA, the nation's largest motorist organization, said yesterday on its website. Pump prices reached a record $4.11 a gallon on July 17.
US gasoline demand fell 3.3 percent last week from a year ago, the 13th consecutive weekly decline, as Americans react to record pump prices by driving less, a MasterCard Inc. report yesterday showed.
Hurricane Dolly strengthened as it moved into the Gulf of Mexico, the National Hurricane Center said yesterday. Offshore fields in the Gulf are responsible for about 25 percent of US oil production.
