Oil prices plunge to US$114 after dollar firms

NEW YORK, August 22, 2008 (AFP) – Oil prices shed more than six dollars a barrel Friday after the dollar firmed and as the world’s second-largest pipeline appeared set to reopen.

New York’s main contract, light sweet crude for October, fell 6.59 to close at 114.59 dollars a barrel.

The benchmark futures contract was 82 cents higher from a week ago, but remains about 33 dollars below its record-high 147.27 dollars on July 11.

In London, Brent North Sea crude for October dropped 6.24 dollars to settle at 113.92 dollars.

On Friday, oil prices that had surged more than five dollars the prior day headed south when the dollar lost steam against the euro, said Phil Flynn at Alaron Trading.

“At the end of the day it is all about oil perceived value against a backdrop of uncertainty and a world and economic system gone wild,” he said.

“The best way to judge in terms of commodities is to watch the dollar. That is the gauge that will drive them all.”

The euro, which rose above 1.49 dollars Thursday, was trading around 1.47 dollars Friday.

The greenback’s newfound vigor inspired profit taking in dollar-denominated oil ahead of the weekend, analysts s