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Oil prices slide as Scottish refinery strike ends
NEW YORK
Petroleumworld.com, April 30, 2008Oil prices tumbled Tuesday from near-record highs as the end of a Scottish refinery strike eased supply concerns and the market expected the US Federal Reserve to again lower interest rates.
In Tuesday trade, New York's main oil futures contract, light sweet crude for June delivery, slid 3.12 dollars to close at 116.06 dollars per barrel.
In London, Brent North Sea crude for June sank 3.31 dollars to settle at 113.43 dollars.
" A drop of several dollars, from this lofty perch, represents very little on a percentage basis. Unfortunately, the vast speculative wave will probably view any setback as another opportunity," said Mike Fitzpatrick, analyst at MF Global.
Analysts said the pullback from Monday's gains was due in part to the end of a two-day strike Tuesday at the Grangemouth refinery that also had closed the Forties North Sea pipeline, which supplies 40 percent of Britain's oil and gas and is operated by British energy group BP.
Oil prices fell "as the Grangemouth refinery in Scotland resumed its operations and as the greenback continued to strengthen against the euro," said Sucden analyst Andrey Kryuchenkov.
A stronger US currency tends to discourage demand for dollar-priced crude, which becomes more expensive for foreign buyers.
Analysts expect the Fed to lower its key interest rate by a quarter point to 2.0 percent Wednesday before taking a pause after a series of aggressive rate cuts to stimulate the ailing US economy.
" Attention is turning to focus on the (Fed) meeting," analysts at energy consultancy John Hall Associates wrote in a note to clients.
" Further softening in policy is likely to be supportive of crude prices given the impact on the US dollar."
New York crude touched a new intraday record high of 119.93 dollars Monday, lifted by the Scottish refinery strike and fresh violence and a separate strike in Nigeria, Africa's largest producer of crude.
As crude futures slumped Tuesday, US President George W. Bush said he would not dip into the US strategic oil reserve, saying such action would not help curb prices.
" If I thought it would affect the price of oil positively, I would seriously consider it, but when you are talking about one-tenth of one percent of global demand, in the cost-benefit analysis, you do not get any benefits and I think it costs you oil in the case of a national security risk," Bush told reporters.
" And I do believe it is in our national interest to get the (reserve) filled, in case there is a major disruption of crude oil around the world," the president added.
The US Strategic Petroleum Reserve, created in 1974, keeps hundreds of millions barrels of oil stored in underground salt caverns on the Texas and Louisiana coasts.
Story from AFP
AFP 29 1956 GMT 04 08
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