Oil prices plunged more than four dollars today, as reports indicated Hurricane Gustav has not proved as damaging to US oil facilities as initially feared. Prices for West Texas Intermediate crude for October delivery reached a four-month low of US$110.63. Prices for Brent crude also fell sharply, reaching $109.20. The fall in price reflected confidence among traders that US offshore platforms and coastal refineries had not been seriously damaged by Gustav, which swept into the Gulf of Mexico last week and pounded the Louisiana coast with winds up to 177 kilometres per hour yesterday.
The fall in prices also marked the conclusion of a sharp run-up in oil prices that began in early May amid a fall in the value of the US dollar, an inflow of speculative investment, concerns about surging Asian demand and a belief that the US, Iran and Israel were at the brink of an armed confrontation. Now, the spotlight has turned to concerns among some exporters that the oil price may fall too far, too fast.
Gholamhossein Nozari, the Iranian oil minister, said this morning that Opec should move to "control" an "excess" of oil supplies on the market when it meets next week in Vienna. "Oil supply must be well-proportioned with demand and control over Opec's excess oil supply is an issue that must be discussed at the organisation's upcoming meeting," Mr Nozari said, according to the Iranian state news agency, Irna. @Email:firstname.lastname@example.org