Oil Prices Fall Below $72 a Barrel ($71.37/bbl)

Associated Press ^ | April 27, 2006

[RWR8189]

SINGAPORE - Oil prices eased Thursday after U.S. government data showed motor fuel demand weakening, apparently in response to higher pump prices.

The data also showed that domestic inventories of gasoline shrank for the eighth consecutive week, and that may have moderated the selling, analysts said.

Light, sweet crude for June delivery fell 23 cents to $71.70 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract settled Wednesday at $71.93, down 95 cents.

Brent crude for June delivery on London's ICE Futures changed hands at $72 a barrel, down 9 cents.

Gasoline futures dropped 2.10 cents to $2.1125 a gallon while heating oil prices fell 0.55 cent to $2.0174 a gallon.

The U.S. Energy Department said gasoline demand was up 0.3 percent over the past four weeks compared with the same period in 2005. But at this time last year, demand for the four-week period had risen 1.5 percent compared with the same period in 2004.

The average retail price of gasoline in the U.S. is now $2.91 a gallon, or 68 cents higher than a year ago.

Despite the recent declines, oil prices remain about a third higher than a year ago because of supply disruptions, geopolitical tensions and the scant surplus production capacity available to the industry in the event of a major output hiccup. Analysts also said they expect global energy demand to remain strong.

Most prominent among supply disruptions, Nigeria is producing some 450,000 fewer barrels per day because of violence in the region. On the geopolitical side, the West's effort to contain Iran's nuclear ambitions is the top concern.

China said Thursday the Iran nuclear crisis is at a crucial stage and restraint was needed to resolve the issue as Iran faces a Friday deadline by the U.N. to stop enriching uranium.

"We hope the relevant parties can keep calm and exercise restraint so as to avoid moves that would further escalate the situation," Qin Gang, a Chinese Foreign Ministry spokesman said.

The situation was "indeed at a crucial stage," he said at a regular briefing.

The Energy Department report showed that domestic crude oil inventories fell by 200,000 barrels last week to 345 million barrels, or 5.6 percent above year-ago levels. Gasoline inventories shrank by 1.9 million barrels to 200.6 million barrels, or 5.6 percent below year-ago levels. Supplies of distillate fuel, which include heating oil and diesel, increased by 1 million barrels to 115.6 million barrels, or 10.6 percent higher than last year, the agency said.

Refineries ran at 88.2 percent of their capacity, up 2 percent from a week ago, while crude-oil imports rose by 199,000 barrels a day to 9.86 million barrels a day.

[RWR8189]

Light Sweet Crude Oil

4/27/2006 Session Contract Detail for June 6

	Last				71.37
	Open High				71.93
	Open Low				71.93
	High				72.01
	Low				71.20
	Settle				71.93
	Change				-.56
	Open Interest				290951
	Volume				0.00
	Last Updated				04/27/2006 05:50:32

Gasoline

4/27/2006 Session Contract Detail for May 6

	Last				2.1050
	Open High				2.1310
	Open Low				2.1310
	High				2.1310
	Low				2.1050
	Settle				2.1335
	Change				-.0285
	Open Interest				20918
	Volume				0.00
	Last Updated				04/27/2006 05:50:39

[Jeff Chandler]

Whew! Glad that's over with. On to the next Bush-induced crisis.

[stopem]

http://www.comcast.net/news/index.jsp?cat=GENERAL&fn=/2006/04/26/377893.html&cvqh=itn_oil

"WASHINGTON - A Senate committee Wednesday announced an investigation into taxes paid by major oil companies and asked the Internal Revenue Service for the companies' tax returns."

[DustyMoment]

Once again, the theory of supply and demand is proven. As demand falls, prices weaken. We are seeing a normal fluctuation in the market, NOT price gouging or market manipulation by the oil companies.

BTW, if you want to be mad at somebody over the price of gas, be mad at the federal government. An analysis of oil prices showed the following:

Oil company profit = ~$0.08 - 0.12/gallon
Station franchisee profit = ~$0.12 - 0.14/gal.

Note that both of the above are involved in actually providing/selling a product to consumers.

Tax to state/federal government = ~$0.50/gal. and the government is not selling a product - they are simply taking a cut of the cost off the top.

NOW who do you think is involved in price gouging????

[LowCountryJoe]

April 26, 2006
The Best Deal Going
Don Boudreaux

How to "solve" the "energy crisis"?

We could appoint experts, give them our collective blessing and lots of our tax dollars, and set them to work on finding a solution. Or we could keep the process decentralized, letting the current high profits earned by many oil and gas producers attract entrepreneurs into the energy industry, each creatively exploring (both figuratively and literally) for new and less-expensive sources of fuel.

The latter process is certainly at work. This story ran yesterday on NPR's Morning Edition. It reports on Andrew Perlman, a young entrepreneur in Illinois who is working feverishly to find ways to convert coal into clean natural gas.

Will Perlman succeed? He certainly thinks so. But no one really knows. He might fail utterly. Some other entrepreneur or company, pursuing hunches or visions or brand-spanking-new scientific insights might devise some entirely different means of making clean and abundant fuels.

My favorite line in this story is the one in which Perlman says that just a few years ago there were only three venture-capital firms focused on energy companies; today there are 76 such VC firms. So much money seeking ways to find new sources of energy!

Those entrepreneurs and investors who succeed will become fabulously rich; those who fail will be poorer than they would have been had they not entered the quest.

And those of us who do nothing but freely choose which fuels to purchase will benefit enormously.

I love this market process. People such as me -- people who lack even a whiff of creativity, people who are terribly risk-averse, people who lazily prefer to read novels and work at secure jobs and spend our evenings at home dining and drinking with family and friends -- just sit back and wait for profit-hungry hard-working anxiety-ridden creative entrepreneurs, each in competition with others, to find new ways to improve our lives. And we don't even have to accept what they devise. If we like it, we buy it. If not, we don't buy it.

I almost feel like a free-rider, a lazy bum, a poacher. I do nothing entrepreneurial, and yet my daily life is filled with the marvelous fruits of entrepreneurial creativity and effort. It's an incredibly good deal.

[paguch]

WASHINGTON - A Senate committee Wednesday announced an investigation into taxes paid by major oil companies and asked the Internal Revenue Service for the companies' tax returns."




We do not need another investigation of the industry. What we do need is an investigation of those in Congress who will not support energy independence. We just missed a vote in March by one vote to open ANWAR. Gas prices are high because of the Congress. How dare they do another investigation?

[wolfcreek]

Cool! Let there be one day every couple of weeks where We don't buy gas and see just how far We can manipulate the market.

[LibLieSlayer]

No thanks, I'll be mad at the dims for blocking EVERY ATTEMPT to develop AMERICAN oil resources. I don't care if it costs us MORE in the long run, I want my fuel to be 100% AMERICAN MADE! We need not to be held in a strangle hold by such countries as Venezuela, Iran, or Russia!

ENERGY INDEPENDENCE NOW! NUCLEAR, HYDROGEN, ALTERNATIVE FUELS, AND DOMESTIC SUPPLY!

LLS

[RipSawyer]

Tax to state/federal government = ~$0.50/gal. and the government is not selling a product - they are simply taking a cut of the cost off the top.

NOW who do you think is involved in price gouging????

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I wonder what percentage of the fuel tax actually winds up being used for road and bridge construction and maintenance. The tax is so high that it would seem to provide plenty of money but there are some roads that are falling apart.

[NavyCanDo]

"Oil company profit = ~$0.08 - 0.12/gallon
Station franchisee profit = ~$0.12 - 0.14/gal.
Tax to state/federal government = ~$0.50/gal."

I had a Letter to the Editor printed in the Seattle Times yesterday stating the same facts. Add to this the price of the democrats favorite gas, ethonal which price has increased three-fold. Who's profiting from that?

[CarolinaGuitarman]

"I had a Letter to the Editor printed in the Seattle Times yesterday stating the same facts. Add to this the price of the democrats favorite gas, ethonal which price has increased three-fold. Who's profiting from that?"

Are you trying to tell me that this whole *obscene profits* charge leveled against the oil companies was just a ruse that politicians have used to gain favor among the masses who may be less than adequately educated in the ideas of supply and demand?? I'm shocked I tell you, shocked!!

[DustyMoment]

We need not to be held in a strangle hold by such countries as Venezuela, Iran, or Russia!

That's a different issue and I concur 100%.

[HamiltonJay]

The Energy Department report showed that domestic crude oil inventories fell by 200,000 barrels last week to 345 million barrels, or 5.6 percent above year-ago levels.

5.6% MORE than last year... but we have a shortage of crude? Be serious... this is all just manipulation of the oil futures market for pure greed, nothing more.