Oil Drops $1 on Ceasefire

Elena
14 Aug, 2006
New York City

Light sweet crude for September delivery fell 92 cents to $73.43 a barrel on the Nymex. Natural gas futures fel 25 cents to $7.018 per 1,000 cubic feet. Gasoline futures dropped almost 4 cents to $2.0270 a gallon, and heating oil futures fell slightly to 2.0254 a gallon.

[R]8:00AM Oil prices dropped a dollar after Mideast cease-fire.[/R]
After weeks of volatile trading, oil prices declined almost a dollar Monday following the long expected Mideast cease-fire and news that BP would be able to maintain half of its production at a large oil field in Alaska, an improvement from a previous decision to completely shut down the oil field after discovering a leak a week ago.

A U.N.-brokered cease-fire between Israel and Lebanon's Hezbollah militants took effect at 0500 GMT Monday, ending a month of violence with more than 900 victims taken. Crude oil prices hit a record of $78.40 a barrel on July 14, as the market had worried that the conflict could affect oil supply if it extended into neighboring countries in the oil-rich region, and Iran in particular. Last week prices soared after BP's initial announcement, then retreated on fears that the foiled trans-Atlantic airplane attacks could hurt jet fuel demand and consumer confidence.

Light sweet crude for September delivery fell 92 cents to $73.43 a barrel on the Nymex. London Brent slipped 73 cents to trade at $74.90 a barrel. Natural gas futures fell 25 cents to $7.018 per 1,000 cubic feet. Gasoline futures dropped 3.73 cents to $2.0270 a gallon, and heating oil futures fell slightly to 2.0254 a gallon.


[R]7:30AM Japanese stocks advance on strong company reports despite blackout.[/R]
Asian markets were higher on Monday. The Nikkei 225 Average in Japan was up 1.45% to 15,790.82 at 1:25 p.m. Tokyo time when a computer error caused by the blackout caused the index to stop updating. By the time markets closed at 3 p.m., index calculations had not resumed. However, all component stocks continued trading as usual. According to independent calculations, the Nikkei would have ended the day up about 1.9%. Fast Retailing Co, the operator of clothing chain Uniqlo, advanced 4.67%. Bridgestone Corp was up 4.59% after the Daiwa Institute of Research said it expects the company to return to strong profits next year despite weaker earnings recently due to high material costs.

Hong Kong''s Hang Seng Index finished the day up 0.23% to 17,290.01. Li Ka-shing''s Hutchison Whampoa rose 1.72% on local media reports, denied by the company, that it may list its retail businesses separately. South Korea''s Kospi Index was up 0.23% as exporters including Hyundai Motor and LG Electronics advanced. The country''s markets will be closed Tuesday for the Independence Day holiday.

Australia''s S&P/ASX 200 was up 0.45% despite a sharp drop by top telecom firm Telstra Corp. The Shanghai Composite Index, in China, ended down 2.2% on expectations the government would step up tightening measures after figures released Friday showed money supply grew by a faster than expected 18.4% in July.


[R]7:00AM European markets rose on oil price slump.[/R]
European markets were higher on Monday.The U.K. FTSE 100 index added 0.6% at 5,854, the German DAX Xetra 30 index rose 0.8% at 5,675 and the French CAC-40 index increased 0.8% at 5,027. Oil also was lower as BP said on Friday that it will pump 200,000 barrels of oil a day from the Prudhoe Bay field in Alaska during repairs; BP had initially said it would shut the entire 400,000 barrels a day field.

Airlines that are sensitive to oil prices rose. British Airways rose 1% and Lufthansa added 1.3%. German construction and infrastructure group Hochtief rose 2.2% after it said that its second-quarter profit rose 37% to 58.5 million euros ($74.6 billion) and sales rose 6% to 3.7 billion euros. Citigroup cut mobile-phone operator Vodafone Group to hold from buy, saying the company is worth over 150 pence a share if it executes well but that the market needs confidence that environmental factors won''t overwhelm management''s efforts.

Oil prices dropped nearly a dollar Monday as traders expected the upcoming Mideast cease-fire and responded to the positive news that BP would be able to maintain half of its production at a large oil field in the U.S. state of Alaska. Light sweet crude for September delivery fell .92 cents to $73.43 a barrel. September Brent at London''s ICE Futures exchange slipped .73 cents to trade at $74.90 a barrel.

Gold traded lower on Monday at $629.00 an ounce, down $12.60 an ounce from Friday''s close of $641.60. The euro was up against the U.S. Dollar, buying $1.2756 in early European trading, up from $1.2729 in New York late Friday. The British pound rose to $1.8928 from $1.8901.The dollar was a little higher against the Japanese currency, climbing to 116.35 yen from 116.26 yen.