Oil prices fall sharply as dollar strengthens

LONDON, July 29, 2008 (AFP) – Oil prices fell heavily on Tuesday as traders reacted to the stronger dollar, erasing earlier gains seen after energy giant Royal Dutch Shell suspended some of its crude deliveries from Nigeria. OPEC President Chakib Khelil described crude prices above 120 dollars a barrel as “abnormal,” adding that they could fall to 78 dollars should the US currency strengthen and tensions ease over Iran’s nuclear programme.

Brent North Sea crude for September delivery fell 3.20 dollars to 122.64 dollars a barrel in electronic deals in London.

New York’s main contract, light sweet crude for September, slumped 2.98 dollars to 121.75.

In foreign exchange market action on Tuesday, the European single currency sank to 1.5688 dollars, from 1.5741 dollars late on Monday in New York.

The greenback strengthened after news that US consumer confidence showed slender gains in July but still reflected a “grim” assessment of economic conditions, the Conference Board reported Tuesday.

The business research firm said its monthly index of consumer confidence edged up to 51.9 percent from a revised 51.0 in June, yet cautioned against reading too much into the gain.

A strong US currency dents dema