Oil prices slip below $79

Source: Energy Digital

Date :09/10/2007 03:55:38

Oil prices steadied just under $79 on Tuesday, after dropping almost three percent a day ago.

U.S. crude futures slipped 10 cents to $78.92 a barrel Monday, after hitting a three-week low of $78.35 a barrel whilst London Brent crude fell 17 cents to $76.41.

Unstable

Oil prices have been unstable in recent days as investors question whether demand will weaken in the fourth quarter.

Some analysts point to ebbing demand for gasoline and forecasts for high temperatures through December as signs the oil, gasoline and heating oil markets are adequately supplied.

Others say low heating oil inventories and refinery activity shows supplies are tight.

As a result, some analysts believe oil will fall to $65 a barrel or lower, following a typical seasonal pattern, while others expect futures to break that pattern and push toward $90 a barrel.

Strengthening

A strengthening dollar has also led to lower oil prices.

The record low of the greenback against the euro in September following the Federal Reserve cut in interest rate helped to push crude oil futures to a record high of $83.90 a barrel later in the month.

A weak dollar makes oil and other dollar-denominated commodities inexpensive when calculated in other currencies.

The dollar has risen following a report last week showing U.S. jobs growth in September, its best performance since May.

Analysts say oil prices are also easing as the market believes tropical weather systems no longer pose a serious threat to critical gas and oil infrastructure in the Gulf of Mexico.

This has curtailed concerns that the world's top energy consumer was set to tip into a recession.

Traders are now waiting for the U.S. Energy Department's weekly report due Thursday.

October 9 2007