12 Sep 2008

Oil price falls as US dollar strengthens

9:19 pm on 12 September 2008

Oil prices fell toward $US100 on Thursday, pulled lower by strength in the US dollar, soft global energy demand, and a report that Saudi Arabia has no plans to cut output.

The losses were tempered slightly by intensifying disruptions in the United States caused by Hurricane Ike.

US crude fell $US1.71 to settle at $US100.87 a barrel after dipping as low as $US100.10, the lowest level since early April. London Brent slipped $US1.33 to $US97.64 a barrel after dropping to a six-month low of $US96.99.

Downward pressure came from a rising US dollar, which scaled a one-year high against the euro. A stronger dollar can weaken the purchasing power of buyers using other currencies -- adding momentum to already flagging global consumption.

Encouraging the losses, the Saudi-owned Al Hayat newspaper said on Thursday that Saudi Arabia has no plans to cut oil output at present unless customer demand falls.

The report came a day after OPEC members agreed to trim back output following a steep decline in oil prices since the peak above $US147 a barrel hit in mid-July.

The price fall was slightly limited by the effect of Hurricane Ike, which paralyzed about a quarter of US crude oil production and more than 16% of its fuel production capacity on Thursday.