Crude falls on expectations of less demand for jet fuel

August 11, 2006|Associated Press

NEW YORK -- Crude oil prices fell more than $2 a barrel yesterday as thwarted airplane attacks led many carriers to cancel flights, which could mean dampened jet fuel demand and weaker consumer confidence.

Prices also deflated after Shell said it was bringing back 180,000 barrels of daily oil production in Nigeria. Goldman Sachs, meanwhile, said it would end its participation in the New York Harbor unleaded gasoline contract, as expected, but wouldn't roll its money into another contract.

Gasoline prices fell 9 percent to a four-month low, as big funds bailed out of the contract.

British authorities said yesterday they had stopped a terrorist plot to blow up several aircraft in flight between the United States and the United Kingdom.

Tom Bentz, an analyst at BNP Paribas Commodity Futures in New York, said the news ``revives fears, and causes people to cut travel plans, which has a contracting effect on petroleum demand."

Light, sweet crude for September delivery dropped $2.35, or more than 3 percent, to settle at $74 a barrel on the New York Mercantile Exchange -- erasing all of this week's gains, and more. It was the lowest settlement price since July 28.

Gasoline futures dropped 18.33 cents to finish at $1.9889 a gallon, the lowest since finishing at $1.9766 on April 7.

Heating oil futures fell 8.13 cents to settle at $2.0250 a gallon.

Brent crude on London's ICE futures exchange fell $2 to settle at $75.28 a barrel.

Also, a Nigerian pipeline run by Royal Dutch Shell PLC was back in service, according to Dow Jones Newswires. Shell had blocked the 180,000 barrel-a-day pipeline in late July after a leak.