Oil price slides to $111
Aug 11 2008 20:02
London - Oil prices sank on Monday, erasing earlier gains on global demand fears, as traders set aside worries that fighting between Georgia and Russia would disrupt global energy supplies.
Brent North Sea crude for September delivery sank $1.89 to $111.44 per barrel, after touching a low of $111.07.
New York's main contract, light sweet crude for September delivery, sank $2 to $112.83 a barrel. The contract had earlier swung as low as $112.83 - the lowest point since May 1.
Barclays Capital analysts said that traders were concentrating on "global recessionary fears dampening the demand for oil".
Sucden analyst Nimit Khamar added: "The market turned a blind eye to problems with the Baku-Tbilisi-Ceyhan pipeline and the escalating conflict between Russia and Georgia."
Oil also fell on the back of the strengthening US currency, which weighs on demand for dollar-priced goods because they become more expensive for buyers with weaker currencies.
In the foreign exchange market, the European single currency had tumbled to $1.4907 in Asian trade - the lowest point since February 26.
Earlier on Monday, oil prices had bounced close to $117 per barrel as violence halted oil exports through Georgian ports at the weekend. New York crude touched an intra-day peak of $116.90.
"Oil prices ... climbed above $116 per barrel this morning as the conflict between Russia and Georgia heightened concerns of energy exports disruption from the Caspian region," Barclays Capital analysts added.
"Bombings by Russian forces have damaged Tbilisi's Black Sea port of Poti, an important oil shipment facility.
"Shipments of oil and oil products from two of Georgia's ports, Batumi and Kulevi, have been suspended as well."
The head of Azerbaijan's state oil company had said on Saturday that exports had been halted via two Georgian ports owing to the fighting.
Georgia does not produce oil but the country is a key transit point for crude and gas exports from Azerbaijan to markets in the West.
Concerns over supply disruptions had pushed crude oil prices to record highs above 147 dollars in July but slowing global economic growth has seen them fall sharply in recent weeks.
- Sapa-AFP
