Storm threat fails to bolster oil price

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Oil prices sank yesterday despite a looming hurricane in the Gulf of Mexico as traders bet that demand for crude would drop back as refineries were shut down to weather the storm.

In a volatile session, Brent crude gave up early gains to slip back to $112 a barrel, amid renewed speculation that the White House could also release stockpiles to bring down the high oil prices threatening economic recovery.

Tropical storm Issac is headed towards the US coast and likely to be upgraded to hurricane status today.

Waning hopes that Ben Bernanke, the Federal Reserve chairman, will signal more stimulus for the economy in his Jackson Hole address on Friday also hit crude. The Fed's last money-printing intervention in 2010 triggered a six-month rally in oil prices.