Oil little changed near $145 a barrel in Asia

The U.S. Federal Reserve said Sunday it would lend if necessary to major U.S. 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 it would seek congressional approval to make a possible equity investment in the two companies.

The moves reflect a deepening credit crisis for the U.S. economy to overcome, said Victor Shum, an analyst with energy consulting firm Purvin & Gertz in Singapore.

"While the Fed action on Fannie and Freddie will prevent a short-term credit meltdown, it also shows the extent of the problem facing the U.S. economy," Shum said. "It will likely keep the Fed from raising interest rates anytime soon, and that's bad for the dollar."

Investors have been buying dollar-denominated crude contracts as a hedge against inflation and a weakening dollar, pushing the price of oil to double in the past year.

Midday in Singapore, light, sweet crude for August delivery was down 2 cents at $145.06 a barrel in Asian electronic trading on the New York Mercantile Exchange.

The contract rose to a trading record of $147.27 a barrel in New York on Friday before closing at $145.08, just down from Thursday's settlement record of $145.29.

The dollar was slightly stronger against the yen in Asian currency trade at 106.38, while the euro had weakened a little to $1.5907.

Elsewhere, fears that a strike by Brazilian oil workers will cut supplies also helped keep crude prices from falling. About 2,500 workers in the Campos Basin, which produces more than 80 percent of Brazil's oil output, began a strike at midnight Sunday (0300 GMT) to demand that state-run oil company Petrobras give them an extra day off at the end of each two-week shift on the platforms.

"Supply-side concerns in Brazil, Iran and Nigeria are putting a high floor on prices," Shum said. "We see limited downside risk and expect higher highs in the coming weeks."

Iranian officials vowed on Sunday that the Islamic Republic would fight back against any attacks on it and "cut off the hands" of the invaders. The comments came amid heightened speculation that Israel and the United States will attack Iranian targets to destroy what they say are Tehran's suspicious nuclear programs.

Nigeria's main militant group said last week it planned to resume attacks in the oil-rich Niger region because of a British pledge to help support the government in ending the conflict there.

Iran is OPEC's second-largest oil exporter, while Nigeria is Africa's largest oil producer.

In other Nymex trade, heating oil futures rose 0.07 cent to $4.0773 a gallon (3.8 liters) while gasoline prices fell 0.48 cent to $3.5584 a gallon. Natural gas futures rose 13.5 cents to $12.039 per 1,000 cubic feet.

Brent crude rose 3 cents to $144.52 a barrel on the ICE Futures exchange in London.

Source: http://news.yahoo.com/s/ap/20080714/ap_on_bi_ge/oil_prices;_ylt
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