(AFP) – Aug 18, 2008
NEW YORK (AFP) — Crude oil prices fell Monday as Tropical Storm Fay looked set to spare energy facilities in the Gulf of Mexico and as the Baku-Tbilisi-Ceyhan pipeline appeared ready to reopen soon.
New York's main contract, light sweet crude for September delivery, dropped 90 cents to close at 112.87 dollars a barrel.
In London, Brent North Sea crude for October lost 61 cents to settle at 111.94 dollars a barrel.
"It's been going up and down the whole day," said Andy Lipow of Lipow Oil Associates.
Oil prices earlier had climbed as investors worried that Tropical Storm Fay would strike the Gulf of Mexico, where nearly a quarter of US oil installations are located.
The New York futures contract had bounced above 115 dollars before losing steam when it became clear that Fay, which had battered the Dominican Republic, Haiti and Cuba, was on track to hit Florida.
Royal Dutch Shell said it had evacuated 425 staff from the Gulf of Mexico but added that no more workers would leave as Fay appeared likely to miss its energy installations.
According to the Miami-based National Hurricane Center, Fay could reach hurricane strength before making landfall in Florida late Monday.
The market found additional supply relief after the Turkish government said Monday that it hoped to open the Baku-Tbilisi-Ceyhan (BTC) pipeline, closed after a fire on August 5, "in a few days."
The supply worries concerning the BTC were heightened by the violent conflict between Georgia, where the pipeline transits, and Russia.
Lipow said the market was waiting to see "what comes out of the Russian-Georgian conflict and when we might expect the BTC pipeline to restart."
"That is really the big issue on the market," he added.
The BTC pipeline -- operated by British oil major BP and the world's second-longest pipeline -- has a capacity of 1.2 million barrels a day.
"If the pipeline starts and the Russian troops withdraw (from Georgia), we could have more downside because we see more and more evidence that demand is falling compared to last year," Lipow said.
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