Crude Oil Pares Losses


Crude oil pared losses of almost 2 percent in New York as a five-day strike by Brazilian workers threatened to cut the nation's daily output by more than half.

The strike against Petroleo Brasileiro SA by the union representing 4,500 workers in the Campos Basin, the source of most of Brazil's oil output, is over work rules and pay, said Jose Maria Rangel, the group's regional head. Oil rose to a record July 11 as Iran's defiance of United Nations efforts to halt its nuclear program raised concern that the U.S. or Israel may attack the second-biggest oil producer in the Middle East.

Crude oil for August delivery traded 48 cents lower at $144.60 a barrel at 2:12 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. It fell as much $2.59, or 1.8 percent, to $142.49 a barrel today.

Earlier, oil prices declined as the dollar's advance reduced the commodity's appeal as a hedge against inflation. The dollar gained for the first time in four days against the euro after U.S. Treasury Secretary Henry Paulson asked Congress for approval to help Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages.

Oil has gained 50 percent this year as the sliding dollar and falling U.S. equities prompted investors to buy commodities.

The Nymex August contract jumped to a record $147.27 on July 11 after the dollar fell and the Jerusalem Post said Israeli war planes practiced over Iraq for an attack on Iran's nuclear research facility. Israel denied the newspaper report and oil settled at $145.08, a gain of 2.4 percent on the day.

The Petrobras employees who are represented by Brazil's Oil Workers Confederation on platforms that produce more than 70 percent of the oil in Brazil's Campo Basin have voted to walk out, said Alvarado Menezes, a strike coordinator.

Petrobras exports some of the heavy crude oil from Campos because its refineries aren't fully equipped to handle the heavy grades. It uses the proceeds to buy lighter oil from abroad.

Yesterday Petrobras sought and won an injunction from a Brazilian Labor Court preventing strikers from taking control of platforms or preventing management from doing necessary work to maintain platforms or the integrity of wells during the strike.


TradingEconomics.com, Bloomberg
7/14/2008 6:34:26 AM