Oil prices at 105 dollars, as commodity and credit bubble deflates

LONDON, September 2, 2008 (AFP) – Oil prices dived under 105 dollars on Tuesday, reaching four-month lows, after Hurricane Gustav spared key energy facilities in the Gulf of Mexico and the US currency strengthened, analysts said.

“Hurricane Gustav weakened once it reached the US Gulf Coast, putting pressure on the energy market,” said Andrey Kryuchenkov, an oil analyst at the Sucden brokerage in London.

“The much feared hurricane was downgraded to a tropical storm and the dollar reached a 10-month high against a basket of major currencies (Tuesday), also helping to push oil prices lower,” he added.

New York’s main contract, light sweet crude for October, dropped as much as 10 dollars to 105.46 dollars a barrel from its closing level on Friday.

It then rallied a little to stand at 108.30 dollars, down 7.16 dollars from Friday. US markets were closed on Monday for the Labor Day holiday.

Brent North Sea crude for October fell to 104.14 dollars at one stage on Tuesday, hitting levels last seen on April 4. It later recovered to stand at 107.34 dollars, a fall of 2.07 dollars from Monday’s close.

Hurricane Gustav has weakened to a tropical depression as it blows across Louisiana after having ripped through