LONDON, September 2 – 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.
"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 the Caribbean as a powerful storm, the National Hurricane Center said on Tuesday.
The storm had slammed ashore Monday as a Category Two hurricane packing winds of 110 miles (175 kilometers) per hour but Gustav has steadily weakened overland.
Elsewhere on Tuesday, Iran called for the Organization of Petroleum Exporting Countries to discuss quota-busting by some members at its meeting in Vienna on September 9.
"The oil supply should be proportionate to demand and control of excess supply is an issue which should be addressed at the upcoming OPEC meeting," Oil Minister Gholam Hossein Nozari told the official IRNA news agency.
"Some OPEC members are providing the market with excess supply and producing more than their OPEC quota. Therefore, at the next meeting the members will request a stop to the excess supply," he added.
One hundred dollars a barrel is "a minimum" for oil prices, said the minister, whose country is the world\’s fourth-largest crude producer.
Oil prices are well short of record highs of above 147 dollars a barrel reached in July. Analysts also say that a struggling US economy has curbed demand for crude oil.