Oil settles above US$145 a barrel; White House lifts drilling ban

Source: Agencies  |   2008-7-15  |     ONLINE EDITION

OIL settled above US$145 a barrel for the third time this month, close to where it began yesterday, after a back-and-forth trading session that mimicked last week's wild swings.

Light, sweet crude for August delivery gained 10 cents to settle at US$145.18 a barrel on the New York Mercantile Exchange, just over a dime short of the all-time settlement high. Earlier, the contract dipped as low as US$142.49 and rose as high as US$146.37. In London, August Brent crude fell 57 cents to settle at US$143.92 a barrel on the ICE Futures exchange.

"There's a bit of a tug of war going on," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. "You've got some people in here trying to buy the dips a little bit ... but we're kind of stuck trading inside of Friday's range," when prices gyrated by nearly US$6 and set a new trading record of US$147.27.

Yesterday's oil price swings came as President George W. Bush lifted an executive ban on offshore oil drilling. That alone will not loosen tight global supplies in the short term because a Congressional prohibition remains in place and any new wells would take years to complete.

However, prices might pull back were Congress to end its own ban, said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

"It would send a signal to the market that the US is serious about producing oil. Over time, prices would come down," Flynn said.

The dollar advanced marginally against the euro and yen, but fell against the pound and the Swiss franc. Investors have been buying dollar-denominated crude contracts as a hedge against inflation and a weakening dollar, pushing the price of oil to about double in the past year. When the dollar strengthens, such currency-related buying often unwinds.