5 Aug 2008

Oil price falls to three month low

3:12 pm on 5 August 2008

The price of oil fell to a three-month low on Monday, pressured by evidence of rising OPEC output in the midst of declining demand in the United States and Europe.

The losses extended a steep slide from the mid-July peak above $US147 a barrel and came despite a storm in the Gulf of Mexico that was curbing oil output, shipping and refining.

US light crude fell $US3.69 to settle at $US121.41 a barrel on the New York Mercantile Exchange, after falling as low as $US119.50, the lowest level since early May. London Brent fell $US3.50 to $US120.68.

A Reuters survey showed OPEC supply rose for a third consecutive month in July mainly because of increased output from the world's top exporter Saudi Arabia.

Tropical Storm Edouard is barrelling across a major oil and gas producing area of the northern Gulf of Mexico.

The storm affected shipping and port operations, triggered evacuations and minor production outages offshore, and forced at least one refinery along the coast to shut.

The storm was expected to come ashore at close to hurricane strength Tuesday on the Texas-Louisiana coast.