Oil Falls as Dollar Strengthens, BP Resumes Caspian Shipments

By Grant Smith

Aug. 26 (Bloomberg) -- Oil fell as the dollar strengthened to a six-month high against the euro, limiting the appeal of commodities as a hedge, and shipments of Caspian crude resumed after a pipeline fire.

Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the one million barrel-a-day link was shut by a fire on Aug. 5. Gold and wheat also fell as flagging business confidence in Germany boosted the dollar against the single European currency.

``Futures are under more pressure this morning following a strong recovery in the dollar and after reports that the Baku- Tbilisi-Ceyhan pipeline was operating again,'' said Andrey Kryuchenkov, an analyst at London-based Sucden (U.K.) Ltd.

Crude oil for October delivery fell as much as $1.51, or 1.3 percent to $113.60 a barrel on the New York Mercantile Exchange, trading for $113.80 at 10:28 a.m. London time. Prices are up 60 percent from a year ago. Yesterday, futures rose 0.5 percent to settle at $115.11.

The euro slid to $1.4609, the lowest level since Feb. 14, and was trading at $1.4617 by 9:25 a.m. in London, from $1.4754 yesterday in New York.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net