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Oil drops below $145 a barrel in Asia
By ALEX KENNEDY 1 hour ago

SINGAPORE (AP) Oil dropped below $145 a barrel Tuesday in Asia although a series of threats to supply in a finely balanced market continues to keep a floor under prices.

"The oil market right now is fundamentally tight, which is why prices have been high and volatile," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.

In midday trading in Singapore, light, sweet crude for August delivery was down 26 cents at $144.92 a barrel in Asian electronic trading on the New York Mercantile Exchange.

The contract rose 10 cents in Monday's floor session to $145.18 a barrel, just over a dime short of the all-time settlement high.

Threats to supply in Brazil, Iran and Nigeria have been keeping oil near the record levels hit last week.

A five-day strike by Brazilian oil workers that began early Monday has cut the production of Petroleo Brasileiro SA, or Petrobras by about 4 percent, according to the state-run oil company. Oil workers are striking at 33 rigs in a dispute over pay but only two rigs were totally stopped, Petrobras said.

Petrobras produces about 1.6 million barrels of oil a day. It is estimated to be the world's sixth largest oil company in terms of market capitalization.

Also, tensions remain between Iran and the U.S. and Israel over what the two allies say are Tehran's suspicious nuclear programs. Investors worry that any worsening of the standoff has the potential to disrupt shipments from OPEC's second-largest oil exporter.

Still, some analysts say they expect an easing of pricing later in the second half of the year.

Oil prices that have doubled in the past year have begun to weaken demand, said Moore.

"We've started to see weaker demand in the U.S., but we don't expect this to help lower prices until the fourth quarter," he said. He expects the price of oil to average about $143 in the third quarter and about $137 in the fourth.

Also, a weakening of the dollar helped to support commodity prices Tuesday. Many investors view oil and other commodities as hedges against inflation and a weakening dollar, and their prices tend to rise as the currency declines.

The dollar fell to 105.79 yen in Asian currency trade, while the euro strengthened to $1.5940.

On Monday, U.S. President George W. Bush lifted an executive ban on offshore oil drilling. That alone is not expected to loosen global supplies in the short term since a Congressional prohibition remains in place and any new wells would take years to complete.

August Brent crude fell 6 cents to $143.86 a barrel on the ICE Futures exchange in London.

In other Nymex trade, heating oil futures fell 0.08 cent to $4.0641 a gallon (3.8 liters) while gasoline prices added 0.03 cent to $3.558 a gallon. Natural gas futures fell 0.4 cent to $11.955 per 1,000 cubic feet.

Oil Falls After Report Shows Unexpected Increase in Supplies

By Mark Shenk

July 16 (Bloomberg) -- Crude oil futures fell more than $5 a barrel in New York after a U.S. Energy Department report showed an unexpected increase in inventories.

Supplies rose 2.95 million barrels to 296.9 million barrels last week, the report showed. Inventories were forecast to drop 2.2 million barrels, according to the median of analyst estimates in a Bloomberg News survey. Prices tumbled 4.4 percent yesterday on signs that the slowing U.S. economy is cutting fuel use.

``The inventory numbers are starting to reflect the bad macro-economic news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Not only did we get a surprise build in crude-oil stocks, the products were also up nicely.''

Crude oil for August delivery fell $5.60, or 4 percent, to $133.14 a barrel at 10:42 a.m. on the New York Mercantile Exchange. Prices are heading for the biggest two-day drop since January 2007. Oil traded at $137.53 a barrel before the release of the report at 10:35 a.m. in Washington.

Gasoline stockpiles rose 2.47 million barrels to 214.2 million barrels, the report showed. An 800,000 barrel decline was forecast. Inventories of distillate fuel, including heating oil and diesel, gained 3.19 million barrels to 125.7 million, the department said. A 2 million barrel increase was forecast.

Crude oil had the largest percentage decline yesterday since March as Federal Reserve Chairman Ben S. Bernanke said risks to U.S. expansion and inflation have risen.

Prices paid by U.S. consumers jumped 1.1 percent in June after a 0.6 percent gain the prior month, the Labor Department said today in Washington. It was the most since 2005. Excluding food and energy, so-called core prices climbed 0.3 percent, also more than anticipated.

Nuclear Negotiations

Plans by a high-ranking American diplomat to take part in nuclear negotiations with Iran have tempered speculation that the U.S. or Israel may attack OPEC's second biggest oil producer, in a dispute over its nuclear plans. Concern about a possible strike helped push oil prices to a record last week.

Undersecretary of State William Burns will participate in the European Union-Iran talks this weekend in Geneva, State Department spokesman Sean McCormack said today without giving details. This is a shift in the U.S. position on talks with a government it has shunned since 1980.

Brent crude oil for August settlement declined $4.92, or 3.6 percent, to $133.83 a barrel on London's ICE Futures Europe exchange. Prices climbed to $147.50 on July 11, the highest since trading began in 1988.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

AP IMPACT: Big Oil profits steered to investors
By JOHN PORRETTO 21 July 2008

HOUSTON (AP) As giant oil companies like Exxon Mobil and ConocoPhillips get set to report what will probably be another round of eye-popping quarterly profits, just where is all that money going?

The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.

It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.

The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of Big Oil earnings reports Wednesday.

Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.

In the first three months of this year, Exxon Mobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.

ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion nine times what it spent on exploration.

Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.

But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.

And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.

"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.

Investor-owned companies like Exxon Mobil and Chevron hold less than 10 percent of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.

State-run oil companies, like those in Saudi Arabia and Venezuela, control about 80 percent of oil reserves and at today's prices, it's not surprising they're keeping a tight grip on what they have. Scarce equipment and hard-to-find labor also pose problems.

No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.

"It becomes a management decision," said Howard Silverblatt, a senior index analyst at Standard & Poor's. "It's not like they're going to the board and saying, 'Well, I can do one or the other or the other.' The balance sheets are flush with cash."

So what's Big Oil to do?

The companies say they are doing what they can to find more fossil fuels around the world, but the easy oil is gone. Exploring these days may mean expensive projects in thousands of feet of water in the Gulf of Mexico or costly ventures pulling petroleum from Canada's vast oil-sands deposits.

TransCanada Corp. and ConocoPhillips Co. just said they'd spend $7 billion to nearly double the amount of crude flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast.

And analysts point out that because there's no guarantee oil prices will stay in the stratosphere, oil companies should approach exploration projects with caution.

"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."

It's also important to remember it can take several years before a company produces the first barrel of oil from a new field.

One example is an oil field in the Gulf of Mexico called Thunder Horse. Operated by BP and partly owned by Exxon Mobil, the platform only last month began producing oil and gas nine years after the field's discovery.

At its peak, the multibillion-dollar project is designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer.

"When you look at the spending that's going on, the companies are bringing on a lot of long-term discoveries," said John Parry, a senior analyst with John S. Herold Inc.

At ConocoPhillips, the capital spending budget for 2008, which includes exploration and production, is $15.3 billion, more than double the spending of five years ago.

"Could we spend $20 billion or $25 billion? Absolutely," spokesman Gary Russell said. "Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not."

Exxon Mobil, known for its disciplined approach to investing in energy projects, has drawn criticism for its reluctance to invest in alternative energy sources like wind and solar power.

The company expects to spent $25 billion to $30 billion on capital and exploration projects each of the next five years. Last year, it spent about $32 billion on share buybacks.

"You fund your investments that make sense," said spokesman Alan Jeffers. "You have criteria, and you have to meet that to be a good investment for the shareholder. And then if you've got cash that's left over, you're going to return it to the shareholder because it's theirs."

Exxon Mobil often touts its $100 million contribution to Stanford University's Global Climate and Energy Project. By contrast, BP says it plans to spend $8 billion over the next decade developing alternative energy using wind, hydrogen and other means.

Big Oil isn't alone buying back large amounts of stock, but the companies are certainly some of the biggest indulgers.

A boom in stock buybacks has been under way in corporate America since 2004. In the first quarter of this year, Exxon, ConocoPhillips and Chevron were all among the top 10 companies for share buybacks in the S&P 500.

In Washington, one Democratic proposal would impose a 25 percent tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.

But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.

"When you hear that," he said, "it screams out for a windfall profits tax."

http://ap.google.com/article/ALeqM5jdMq36pfzhyHeyexEU51JX5sr1egD922FK000

December 2008 oil prices will be in the region $197 - $210.

WHY?????PLEASE TELL/

Huge sell off again today before the open and now rallying, so far to the close. Inventories tomorrow.20 dollar drop in last week, has the bubble burst, through speculation restriction increased production, decreased demand or is it preparing for a rally on steroids with the next geopolitical/ climatic hiccup , time will tell

DITTO//

EASY MONEY

shadow is not renouned for his forecasting, or maybe he is, in as much as he has this uncanny knack of being totally wrong, but we shall have to wait and see on his 'look into the future'.
2517

Oil extends decline, drops below $128
By GILLIAN WONG 23.07.2008

SINGAPORE (AP) Oil prices slipped further Wednesday after tumbling more than $3 a barrel in the previous session as a hurricane looked likely to spare key oil installations in the U.S. Gulf of Mexico.

Traders in Asia awaited the release of U.S. oil supply data later in the day that was expected to show a rise in gasoline stocks amid weakening demand in the world's largest energy consumer.

Light, sweet crude for September delivery fell 82 cents to $127.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell $3.40 to settle at $128.42 in the previous session.

The August contract fell $3.09 to settle at $127.95 a barrel as it expired at the end of floor trade.

The overnight sell-off dragged oil prices to their lowest level since early June and was crude's fifth decline in the last six sessions.

Prices fell as Dolly a tropical storm that spun into a hurricane on Tuesday headed toward the U.S.-Mexico border but grew increasingly unlikely to threaten key oil supply in the Gulf. That gave traders one less reason to buy as a strengthening dollar helped keep prices in check.

The drop offered further evidence that investors are now quickly pulling money out of the market, after driving prices to a record above $147 only a week and a half ago. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down just as incremental supply concerns previously drove prices sharply higher.

"Clearly, there's not a lot of price-supporting news in the market, and what was there has been diminished now with Hurricane Dolly," said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.

"This market's still fundamentally quite strong it's just that we've seen prices coming off from over-inflated levels. The market's letting steam out," Pervan said. "There's genuine reason to be taking profits in this market with the weak U.S demand numbers."

Crude oil inventories were expected to drop by 1.9 million barrels in the U.S. Energy Information Administration's weekly petroleum supply report, according to the average of analysts' estimates in a survey by energy research firm Platts.

The survey also showed that analysts projected gasoline stocks to rise by 500,000 barrels.

"I suspect we'll see another rise in gasoline stocks, highlighting again that demand is certainly weak," Pervan said.

In its weekly pump spending survey, MasterCard found U.S. gasoline demand dropped last week for the thirteenth week in a row. Demand fell 3.3 percent compared with the same week a year earlier, according to the survey. Since the start of 2008, gasoline demand is down 2.2 percent.

In other Nymex trading, heating oil futures lost 1.82 cents to $3.66 a gallon (3.8 liters) while gasoline prices dropped 0.74 cent to $3.1396 a gallon. Natural gas prices added 0.7 cents to $10.074 per 1,000 cubic feet.

September Brent crude fell 74 cents to $128.81 a barrel on the ICE Futures exchange in London.

Oil hits 7-week low on demand worries, dollar gain
By STEVENSON JACOBS 29 July 2008

NEW YORK (AP) Oil prices tumbled more than $2 a barrel Tuesday, finishing at their lowest level in seven weeks as a stronger dollar and beliefs that record prices are eroding the world's thirst for energy sparked another dramatic sell-off.

The drop which surpassed $4 a barrel at one point during the day was a throwback to oil's nosedive over the past two weeks and outweighed supply concerns touched off by a militant attack Monday on two Nigerian crude pipelines. It was oil's seventh decline in the last 10 sessions.

Light, sweet crude for September delivery fell $2.54 to settle at $122.19 on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since June 10. Earlier, prices fell to $120.42, also the lowest level since June 10. Oil has now fallen more than $25 from its trading high of $147.27, reached July 11.

More concerns that crude's run-up over the past year has pushed prices to unsustainable levels fed Tuesday's decline. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May or 3.7 percent compared to the same period last year, the biggest drop ever for the historically busy summer driving month.

And demand for oil in the U.S. the world's thirstiest consumer continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department's Energy Information Administration said Monday.

"We're seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold.

"Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.

Also weighing on prices was a sharply stronger dollar compared to the euro, which made commodities less attractive to investors who have bought oil futures as a hedge against inflation and weakness in the U.S. currency.

The euro bought $1.5584 compared with $1.5752 late Monday in New York.

"It looks like oil is selling off today with the very, very strong dollar and nothing to drive it higher. Quiet seems to be bearish these days," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service in Wall, N.J.

In another sign that high prices are curbing Americans' consumption for fuel, retail gas prices fell further below the $4-a-gallon mark. The average price of a regular gas fell 1.7 cents to $3.941, according to auto club AAA, the Oil Prices Information Service and Wright Express.

Monday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC and was the latest in a two-year campaign of attacks on the country's oil industry. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment.

The oil company said Tuesday it may not be able to fulfill some oil-export contracts because of the damage. Shell didn't specify how much oil production was cut by the attack or how long repairs would take.

The Movement for the Emancipation of the Niger Delta says it is acting to force the Nigerian federal government to send more oil industry funds to the southern region, which produces all of Nigeria's crude oil but remains impoverished after decades of corrupt and wasteful governance.

Analysts at JBC Energy in Vienna, Austria, estimated the repeated attacks on country's oil installations, Nigeria's output had fallen to just below 1.9 million barrels a day from more than 2.4 million barrels a day in 2005.

Oil market analysts are awaiting U.S. data later in the week for indications of how the world's largest economy could be expected to perform in coming months. Figures for gross domestic product for the second quarter will be released Thursday, while July auto sales and the July employment report are both due Friday.

In other Nymex trading, heating oil futures fell 8.98 cents to settle at $3.4722 a gallon while gasoline prices fell 6.23 cents to settle at $3.0077 a gallon. Natural gas futures rose 5.4 cents to settle at $9.217 per 1,000 cubic feet after trading lower most of the day.

In London, September Brent crude lost $3.13 to settle at $122.71 a barrel on the ICE Futures exchange.

thanks smiler o. always a good read cheers.

;)

Oil falls below $120 as Opec production risesPublished: Tuesday, 5 August, 2008, 01:15 AM Doha Time

LONDON: Oil fell below $120 a barrel yesterday, pressured by evidence of rising Opec output in the midst of declining demand in the US and Europe.
The losses, adding to a record slide from the mid-July peak over $147 a barrel, came despite a storm in the Gulf of Mexico that was curbing oil production, shipping and refining.
Crude futures are down despite a brewing storm and that shows you how momentum has shifted in this market, said Phil Flynn, analyst at Alaron Trading in Chicago.
US light crude fell $4.10 to $121 a barrel by evening after slipping as low as $119.50. London Brent crude dipped $3.55 to $120.63 a barrel.
The losses came after a Reuters survey showed Opec supply rose for a third consecutive month in July mainly because of increased output from the worlds top exporter Saudi Arabia.
The boost in production from Opec comes as soaring energy prices and an economic slowdown cut into consumption in the US and Europe.
The market is focused on falling demand with Opec seen producing more oil, said Alarons Flynn.
The bearish impact was countered by Tropical Storm Edouard, which was barreling across a major oil and gas producing area of the northern Gulf of Mexico.
Traders also were nervous supplies could be disrupted as a result of tension between the West and the worlds fourth largest oil producer, Iran.
Oil supplies already have been disrupted from Nigeria, the worlds No8 oil exporter, as a result of militant attacks that have cut about a fifth of its production. Reuters

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=233829&version=1&template_id=48&parent_id=28

ADRL - New Contract In United Kingdom: Drilling Of Gas Storage Caverns


Ability Drilling AS Date: 6 August 2008

New contract in United Kingdom: Drilling of gas storage caverns

Ability Drilling has been awarded a contract with an estimated value of NOK 100 million for drilling of gas storage caverns with Scottish and Southern Energy plc ("SSE"). The contract is for drilling operations related to the Aldbrough Gas Storage Project II, Eastern York. The project is a 50/50 joint venture between SSE and StatoilHydro.

The Aldbrough Gas Storage Project II is the second project for storage of natural gas underground in the area by the two companies. The development of the gas storage area was started in 2002, and the actual project is the second phase of the total development. The contract covers drilling of nine wells, which will subsequently be leeched to caverns (so far not part of the contract). The leaching contract will be awarded during drilling of these 9 wells. The caverns will have a storage capacity of 420 million cubic metres. This equals to the supply of gas in one day to more than 6 million homes. Ability Drilling's operations in this project will commence in Q4 2009 and will last for approximately two years with one rig.

CEO in Ability Drilling Hans Petter Eikeland comments: "We are proud to be awarded this important contract with such a well-reputed company as Scottish and Southern Energy. It is also a pleasure for the management and crew in Ability Drilling to again work with StatoilHydro, who we know very well from the Norwegian Continental Shelf".

Gas storage is a central part of the UK's strategy for handling more imports of gas. It secures the required flexibility in reserves for the country. Strategically, gas storage also increases energy independence. Other countries also evaluate development of more gas storage caverns. Says Mr. Eikeland, "we experience growing interest for the storage concept and believe this market will grow rapidly."

The gas storage caverns are created using well known and proven technology and drilling processes. Directional drilling is used from a central area down to the salt strata. In Aldbrough, this area is about 1700 metres underground. After drilling is completed, the leaching process starts by pumping seawater into the boreholes to dissolve the salt and form the cavern. The natural gas will then be pumped into the caverns and stored under high pressure.

"Some of Ability Drilling's competitive edges, high focus on QHSE and more environmental friendly operation, were crucial in winning this contract," says Mr. Eikeland, who expects the contract will pave the way for new opportunities in the gas storage market.

For further information, please contact:

CEO Hans Petter Eikeland, phone +47 56 32 43 43, or +47 93 20 81 77 CFO Kenneth Tunes, phone +47 56 32 43 43, or +47 91 54 49 01

About Ability Drilling ASA: Ability Drilling aims to become the preferred operator and provider of Rack & Pinion (R&P) rigs in its defined core markets, by combining fourth generation drilling technology with outstanding drilling experience from offshore North Sea exploration and production activities.

The Company currently targets onshore oil operations in the MENA (Middle East North Africa) market, the geothermal market in Europe, as well as the market for drilling of LNG reservoirs. Both the land rig market in MENA and the geothermal segment in Europe are markets with strong growth and significant potential, while the market for drilling of LNG reservoirs is an emerging growth segment. Ability Drilling targets extension of the geographical footprint within all current focus areas.

Ability Drilling has already ordered 11 rigs, of which 10 rigs are still under construction. In addition, the company has options for 33 additional land rigs and 40 additional workover rigs. Ability Drilling's target is to have 20 rigs in operation within 2010.

Ability Drilling is listed on Oslo Axess, with ticker ADRL.

Ability Drilling AS

http://www.ability-drilling.com/

Business, 8/7/2008 11:52 AM August 7, 2008
World oil prices move up slightly in Asian trade

Agence France-Presse

SINGAPORE - Oil prices were slightly higher in Asian trade Thursday after steep falls in recent sessions on worries about waning energy demand, especially in the United States, dealers said.

In morning trade, New York's main contract, light sweet crude for September delivery, rose 30 cents to 118.88 dollars a barrel.

London's Brent North Sea crude for September delivery added 45 cents to 117.45.

"I think it's partly that it has been such a big sell-off (in recent sessions)," said Jason Feer, from energy market analysts Argus Media in Singapore.

Oil prices have tumbled this week on new concerns about demand amid signs of slowing global growth. Crude is down almost 20 percent since reaching record highs above 147 dollars last month.

Prices fell Wednesday after an unexpected jump in US crude reserves but a bigger-than-expected drop in gasoline stockpiles was the other surprise element for the market.

The US Department of Energy announced in its weekly report Wednesday that American crude reserves increased by 1.7 million barrels in the week ended August 1.

The reading caught the market off guard because expectations had been for a 200,000-barrel decline. The weekly report often has an impact on market prices.

Motor fuel stockpiles plunged 4.4 million barrels, well beyond consensus forecasts for a drop of 1.5 million.

"The gasoline numbers have probably raised enough doubts in traders' heads... they probably want to see some more data to see if that is the trend," said Feer.

Traders are closely tracking the level of US gasoline stockpiles amid the ongoing peak-demand summer driving season, when many Americans take to the roads for their holidays

Oil dips to near $119 on stronger dollar
Staff and agencies
08 August, 2008




By ALEX KENNEDY, Associated Press Writer 13 minutes ago

SINGAPORE - Oil prices dropped to near $119 a barrel Friday in Asia as a strengthening dollar and worries about economic growth offset supply concerns over Turkish pipeline sabotage that was claimed by Kurdish rebels.

The gains Thursday in the U.S. came after pro-Kurdish news agency Firat said the separatist group Kurdistan Workers Party, known as PKK, admitted sabotaging the Turkish section of the critical Baku-Tbilisi-Ceyhan pipeline earlier this week.

But the dollar has also strengthened against the euro and yen after the European Central Bank and the Bank of England both left their benchmark interest rates unchanged under conflicting pressure from higher inflation and mounting concern about economic growth.

The central banks actions fed investors sentiment that economic growth is slowing in the developed world, cutting demand for crude, said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

In London, September Brent crude was down 84 cents at $117.02 a barrel on the ICE Futures exchange.

"The disruptions to that pipeline have provided some support to oil prices," Moore said.

Nymex front-month crude futures are down about 18 percent from a record high of $147.27 hit on July 11.

Oil prices turn bearish, but bulls may yet return

9 Aug, 2008, 1000 hrs IST, AGENCIES

NEW YORK: In less than a month crude oil, which some saw hitting $200 a barrel by year-end, has plunged $32 but a rebound could happen, for example, over the Iranian nuclear crisis, analysts say.

From a record-high $147.27 on July 11, the New York futures contract slid to about $115 on Friday, losing almost 22 per cent in the course of four weeks.

In its wake, most other commodity prices, which were driven higher by the oil market surge, have fallen from their peaks: an ounce of gold has dropped to 800 dollars from 1,000; farm commodity prices are between 25 and 40 per cent lower and gasoline prices have dropped about 6.0 per cent.

"Oil is at a tipping point. It is an exaggeration to cry that a bubble has burst. It is a break," said Ellis Eckland, an independent analyst based in Chicago who insisted the "oil market was not in a bubble."

For James Williams at WTRG Energy, the law of supply and demand reins. "The market is simple reflecting the fundamentals of supply and demand. Markets participants are considering the world slowdown, the deterioration in expectations for the growth worldwide," Williams said.

Russian warships are deployed near ports along the Georgian Black Sea coast, including Poti, where Georgian officials say wheat and fuel shipments are being blocked. Russia insists there are no plans to stop oil exports, but says it reserves the right to search any ships. Later reports say the warships have been withdrawn.

UPDATE 1-Oil rises towards $116 on military conflict in Georgia
Mon Aug 11, 2008 6:09am Oil up on fighting between Georgia and Russia

* Shipments of oil and oil products from two Georgia ports suspended, according to a report


By Fayen Wong

PERTH, Aug 11 (Reuters) - Crude oil rose towards $116 a barrel on Monday, rebounding from the previous session's $5 decline on concern fighting between Russia and Georgia could disrupt energy exports from the Caspian region.

U.S. light crude for September delivery CLc1 was up 51 cents at $115.71 a barrel by 0026 GMT, after rising as much as $1.19 earlier.

The contract had finished $4.8 lower at $115.20 a barrel on Friday, before falling to $114.90 in post-settlement trade, the lowest level since early May.

Oil has shed about $31, or 21 percent, since its peak of over $147.27 struck on July 11 on concerns of a slowdown in demand.

London Brent crude LCOc1 rose 66 cents to $113.99 on Monday. Continued...

http://in.reuters.com/article/oilRpt/idINSYD9643720080811

Georgia, oil and gold
Published: August 11 2008 19:17 | Last updated: August 11 2008 19:17

War, what is it good for? Neither oil nor gold is the surprising answer. The explosion of the South Ossetian powder keg should have sent crude and gold prices soaring. Instead, both are down 4 per cent since Thursday. This is odd. Gold rises on geopolitical frisson. And Georgia is a transit route for Caspian oil to Europe.

Why are oil bulls and goldbugs so quiescent? With oil consumption falling in North America and recessionary signals coming from Europe, weak demand trumps geopolitics. Moreover, one of the pipelines crossing Georgia was shut down already and that had failed to support oil prices even before the shooting started.

EDITORS CHOICE
Explorers struggle to secure growth funding - Aug-10In depth: Oil - Apr-29Wildcatters come up to scratch - Jul-28Shell leads as big oil raises R&D by 16% - Jul-28Oil innovation after years of caution - Jul-28Brown seeks US support for action on prices - Jul-24