Crude oil prices plunge to three month lows

06-Aug-08

Settling at US$119, crude oil have dipped to three month lows on news that the Federal Reserve is holding rates steady at 2%, thus fueling added demand concerns for oil. Crude traded as low as US$118 a barrel before recovering marginally. The Federal Reserve, has not altered fed funds rate for the second straight meeting, citing the need to balance a weak economy with rising inflation. The Department of Energy's weekly reports have indicated demand for crude products is below what it was a year ago. Demand is also weakening in Europe, Japan and China. Meanwhile, fuel prices continue to be higher than what they were last year. A daily survey from motorist group AAA showed Tuesday that while average gas prices have fallen for 19 straight days to US$3.871 a gallon, they continue to be more than a dollar higher than a year ago. Concerns about supply disruptions in the Gulf of Mexico were quelled as Tropical Storm Edouard failed to reach hurricane strength when it struck the Texas coast.