Oil Gains a Third Day

Oil rose on speculation that Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities.
TradingEconomics.com, Bloomberg 8/21/2008 6:25:18 AM

U.S. plans for a missile shield in Poland will ``spur an arms race'' in Europe, Russia's Foreign Ministry said in a statement. About 1.1 million barrels of Caspian Sea crude remains shuttered following a pipeline fire in Turkey on Aug. 5. Russia's invasion of Georgia closed some export routes that could have been used to re-direct Caspian supplies to Europe.

Crude oil for October delivery rose as much as $2.69, or 2.3 percent, to $118.25 a barrel on the New York Mercantile Exchange and was trading at $117.94 at 12:54 p.m. in London. Futures are down 21 percent from a July 11 record of $147.27. Prices are 68 percent higher than a year ago.

The September contract expired yesterday after increasing 45 cents, or 0.4 percent, to settle at $114.98 a barrel.

The U.S. currency fell against the euro, driving investors to dollar-priced assets like gold and crude. The dollar slipped to a one-week low of $1.4832 against the euro, and fell 1.3 percent to 108.61 yen, the biggest decline since July 15. Gold for immediate delivery gained as much as $3.93, or 0.5 percent, to $817.61 an ounce.

U.S. gasoline supplies fell 6.2 million barrels last week, the U.S. Energy Department said yesterday, more than double analysts' predictions.

Motor fuel demand was down 1.6 percent from last year's levels. Oil stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain since March 2001.

Brent crude oil for October settlement rose as much as $2.39, or 2.1 percent, to $116.75 a barrel on London's ICE Futures Europe exchange. It was at $116.60 a barrel at 12:53 p.m. London time. It rose $1.11, or 1 percent, to $114.36 a barrel yesterday.