Oil prices edge back above US$115 as new storm forms in Caribbean

26-Aug-08

As Tropical Storm Gustav formed in the Caribbean, oil prices have edged back above US$115 a barrel. Prices were supported by fears that Gustav could threaten oil and natural gas production in the Gulf of Mexico. After dipping to lows of US$113.60, light, sweet crude for October delivery settled above US$115 a barrel on the New York Mercantile Exchange. Prices swung between $12 Thursday and Friday. As the Labour Day holiday approaches, trading has been lighter, adding to the recent volatility of the markets. A dithering US dollar has become the crucial point for investors trying to fathom the direction of crude oil price movement. Monday was an interesting day for the US dollar, as it gained in the early part vs the euro, fell back, and 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 US currency.