Oil dropped to a three-month low - Aug 09 , 2008

NEW YORK: Oil dropped to a three-month low on Friday as the dollar surged and concerns about global economic growth weighed on demand expectations. The fall came even as Russia sent forces into Georgia, a key energy transit region, to repel a Georgian assault on the breakaway South Ossetia region.

US light crude fell $3.84 to $116.18 a barrel by 22:30 pm IST, after hitting $115.61, the lowest level since early May. The drop added to losses that have sent prices down from a record high over $147 a barrel on July 11. London Brent crude traded down $3.90 to $113.96.

“It seems that we’ve got a lot of selling based on the stronger dollar,” said Peter Beutel, president of trading consultants Cameron Hanover. “Energy demand destruction and the dollar return have formed a quiet alliance to bring the oil market down, and today the louder of the two is the dollar.”

Strong demand from emerging economies like China sent oil on a six-year rally, with prices up seven-fold at their peak. More support came from investors rushing into commodities as a hedge against inflation and the weak dollar.

Rupee Appreciates Due To Easing Of Oil Prices - July 21, 2008

The rupee gained against the US dollar on July 18 thanks to the easing of crude oil prices in the global market and gains made by the domestic equity market. The currency opened higher at 42.71/73 and closed at 42.75/76, against the previous close of 42.81/82. During the day, it moved in a range of 20 paise.

Oil was around $130 for a barrel, which helped improve sentiment in the spot rupee market. The upswing in the stock market, which gained by 523 points on Friday, also aided the rupee, said a dealer with a private bank. The companies having the option of buying dollars from the Reserve Bank of India, through the special open market operations, has to some extent taken off the artificial pressure from the spot market. Market participants said that the Reserve Bank of India would keep the monetary policy tight since inflation remains high and earlier inflation figures are being revised upwards by 60-70 basis points.The rupee could remain in the range of 42.80-43.10 next week. In the forward market, the 6-month premium closed higher at 5.07 per cent (4.78) and the 12-month ended at 4.30 per cent (4.14).

World Must Brace For Oil Beyond $150 - July 5, 2008

LONDON: Oil's meteoric rise since the start of the year to nearly $150 has distressed consumers and policy makers the world over, but the stark reality is prices are likely to rise higher still. For two decades, prices were relatively stable, but then they rose seven-fold from a trough below $20 in 2001.

Since breaching the $100 mark on the first trading day of this year they have risen around 45 percent. Given such momentum, politicians' efforts to bring the price down could well be a waste of energy. "It rose so fast it's got a bubble feel, but bubbles can go on for very sustained periods, and underlying that is an extremely tight fundamental position," said Stephen Thornber, head of global energy research at Threadneedle Asset Management.Global demand of some 86 million barrels per day is almost level with supply, and production growth is not keeping pace with soaring demand from emerging economies such as India and China. Citing the strength of Asian demand, investment bank Morgan Stanley last month predicted oil would reach $150 a barrel by the Fourth of July holiday in the United States, usually one of the busiest US travel days.

Their target proved just out of reach, with US crude stopping short at a record of $145.85. But the bulls have not gone away. Goldman Sachs, the biggest investment bank in the commodities sector, has tipped prices to hit $200 a barrel within two years.