Oil prices yo-yo to stabilze around US$82

21-Sep-07

Despite a dip recorded in oil prices, prices are expected to firm up around record levels as the market is wary of potential looming tropical storm off the west coast of Florida. A forecast of a possible tropical storm over the weekend, possibly across Alabama, Mississippi and Louisiana has been made. As a precaution, oil industry workers have temporarily vacated five production platforms in the Gulf, and three drilling rigs have been evacuated. Light, sweet crude for November delivery dipped marginally to US$81.72 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore. October crude contract struck a record high for the fourth straight session before expiring on Thursday at US$83.32 a barrel. November Brent crude dipped to US$78.95 a barrel on the ICE futures exchange in London. The temporary closure of about 25% of the Gulf of Mexico's daily oil production has given an extra boost to the oil market's already strong run in view of tight crude inventories. However, the actual drive behind the rally is an influx of speculative "nontraditional" capital into energy commodities, an inflow that increases when the dollar falls.