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Commodities: Concern over Hurricane Dolly drops

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Date: Wednesday 23 Jul 2008

LONDON (ShareCast) - The price of crude oil for August delivery hit its lowest level since 5 June as concerns over the impact of Hurricane Dolly eased.

The storm is not expected to have a large impact on oil and natural gas production in the Gulf of Mexico, where around one quarter of US crude oil is produced.

A rally by the US dollar also put pressure on oil prices, with the value of the August futures contract falling to $125.63 a barrel at one stage before recovering a little to close at $127.95 a barrel on the New York Mercantile Exchange, $3.09 below the previous day’s close.

The Energy Information Administration and the American Petroleum Institute are both scheduled to publish US petroleum inventories for last week on Wednesday. Analysts are expecting stockpiles of crude to have increased by about 1.9m barrels.

The greenback’s rally also took its toll on the price of gold, which fell after policy makers made noises about the need to push up US interest rates.

The yellow metal dipped below $945 an ounce at one stage before recovering to close at $948.50, its lowest level in more than a week and down $15.20 on the day.

A recovery by US equities, inspired by the drop in the price of oil, also diminished the investment appeal of gold.

Silver, platinum and palladium prices also weakened, while copper prices edged higher.

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