WTI falls below $116 per barrel

Crude oil prices fell significantly Friday as the US dollar gained strength and as investors worried about falling demand.

The situation surrounding a pipeline explosion and fire in Turkey, attributed to sabotage, seems not to have had a lasting impact on prices even though BP (LSE: BP; NYSE: BP; TYO: 5051) and other companies which receive oil through the pipeline have declared force majeure, releasing them from fulfilling contractual obligations to deliver oil due to events out of their control.

A military dispute between Georgia and a break-away province being supported by Russia also had little effect on prices.

September contracts for West Texas Intermediate crude were $4.72 lower just before the close of floor trade on the New York Mercantile Exchange to $115.30 per barrel while Brent crude was down $3.60 to $112.26 per barrel on the ICE Futures Europe exchange in London.

In afternoon trade, Nymex September gasoline had fallen 8 cents to $2.92 per gallon while September heating oil was also down 8 cents, to $3.15 per gallon, and September natural gas had dropped 25 cents to $8.32 per million British thermal units.

At-the-pump prices in the United States were down another cent overnight, to a national average of $3.836 per gallon and there are predictions that pump prices could be as low as $3.50 per gallon on average by Labor Day in the US, which will be celebrated on 1 September this year and marks the end of the summer driving season.