Curde oil futures gyrated on global markets yesterday, falling below $115 a barrel as traders monitored fighting between Russia and Georgia that disrupted some exports from the Caspian region.
Curde oil futures gyrated on global markets yesterday, falling below $115 a barrel as traders monitored fighting between Russia and Georgia that disrupted some exports from the Caspian region.
Oil hovered at its lowest levels since early May, as the dollar edged higher against the euro and pound. The stronger greenback, as well as signs that demand growth is moderating in key energy-consuming countries around the world, has sapped the momentum from this year's surge in energy prices.
A robust dollar makes oil less attractive as an investment to speculators. US light, sweet crude for September delivery initially rose modestly over concern about fighting in the Caucasus area but later fell 75 cents to $114.45 a barrel on the New York Mercantile Exchange, after dipping below the $115-a-barrel mark. In London, Brent crude for September delivery fell 66 cents to $112.67 a barrel.
Analysts said investors were looking again at supply and demand fundamentals, with the Opec producers' cartel's next move and US inventory levels being of prime importance.
"(US) inventories are indicating that the market is a little bit tighter than people think, and that it isn't a one-way bet," said Michael Lewis, global head of commodities research at Deutsche Bank.
"The forward curve is quite a good barometer of funda-mentals in the market, obviously barring these geopolitical events," he said.
Opec president Chakib Khelil, speaking on a visit to Iran, urged members of the oil exporters' group to stick to agreed targets on output.
Crude futures shed more than $5 on Friday, when they largely ignored the outbreak of hostilities in the Caucasus region, a key transit route for oil and gas from the Caspian, to focus on concerns about global economic growth. Prices have tumbled by about 20% since climbing to a peak of $147.27 in July.
Georgia's oil ports of Supsa and Batumi, used to export Azeri crude oil, are operating only partially, while the Georgian port of Poti is not operating, a shipping agent said. Russian warships have been dispatched to Georgia's Black Sea coast, but Moscow has denied targeting oil pipelines. Kazakhstan also stopped shipments of its crude from Georgia's Batumi port. Both Azerbaijan and Kazakhstan also use crude pipelines for export.
London-based BP has said it has been forced to cut production by at least 400,000 barrels a day at the Azeri-Chirag Gunashli oilfields in neighbouring Azerbaijan because of the disruption in the Baku-Tblisi-Cayhan transit route.
The company added that it hoped to move oil exports by other routes.
