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Oil near $145 a barrel on stronger dollar

Oil prices hovered near $145 a barrel, swinging between gains and losses and a stronger dollar against worries about the health of the US economy.

business Updated: Jul 15, 2008 01:17 IST

Oil prices hovered near $145 a barrel on Monday, swinging between gains and losses as traders weighed global supply concerns and a stronger dollar against worries about the health of the US economy.

Light, sweet crude for August delivery fell 52 cents to $ 144.56 a barrel on the New York Mercantile Exchange. Earlier, the contract dipped as low as $ 142.49 and rose as high as $ 146.37. In London, August Brent crude was down 89 cents to $143.60 a barrel on the ICE Futures exchange.

The declines came as the White House said that President George W Bush plans to lift an executive ban on offshore oil drilling. Such a move will not ease tight global supplies in the short term because a Congressional prohibition remains in place and any new wells would take months, if not years, to complete.

The Federal Reserve said on Sunday that it was willing to lend to major US government-backed mortgage giants Freddie Mac and Fannie Mae, which have seen their stock prices plummet amid subprime loan turmoil. The Treasury Department also said that it would seek congressional approval to make a possible equity investment in the two companies.

"The Fed action on Fannie and Freddie is a short- term positive because it prevents a credit meltdown," said Victor Shum, an analyst with energy consulting firm Purvin & Gertz in Singapore.

"But longer-term, it shows the extent of the problem facing the US economy."

The dollar advanced marginally against the euro and yen. 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.