Shhhhh. Don't tell anyone :
Posted on 11/16/2006 2:34:13 PM PST by Risha
Oil Sinks $2.50 for Lowest Level in Year Nov 16 4:26 PM US/Eastern
By BRAD FOSS Associated Press Writer
The price of oil sank by more than $2 a barrel Thursday, settling at its lowest level in a year as traders focused on the bearish aspects of conflicting market trends. OPEC is cutting output, but the U.S. economy is slowing; winter is near, but the country has an abundance of home heating fuels. These mixed signals help explain why crude futures have settled in a range roughly between $57 and $61 since the beginning of October.
The retail price of gasoline, which fell sharply at the end of summer, has also stabilized in recent weeks. Nationwide, pump prices average $2.23 a gallon, or six cents below year ago levels.
Even as oil prices fell through the low end of that range Thursday, many analysts remain bullish in their outlooks, citing concerns about instability in Nigeria and Iraq, a recent drop in U.S. refinery output and trading patterns that suggest the market is preparing for a late- year upswing.
But Michael Guido, Societe Generale's director of commodity strategy, said traders are no longer responding to the kind of geopolitical news that once reliably sparked buying, including frequent kidnappings of oil workers in Nigeria and threats by Iran to pursue its nuclear program over the objections of Western power.
"Too much money has been lost on what-if scenarios," Guido said, and that has pushed many institutional investors, including hedge funds and pension funds, to the sidelines of the energy market.
Light sweet crude for December delivery fell $2.50 to settle at $56.26 a barrel on the New York Mercantile Exchange _ the lowest settlement since Nov. 18, 2005.
Another factor influencing Thursday's selloff: the December contract expires on Friday.
"This is the new pattern for oil trading, it gets weak into expiration," or as the delivery date nears for crude purchased under a futures contract, said Phil Flynn of Alaron Trading Corp. in Chicago. "If you're a buyer, it pays to wait until the last minute."
Nymex crude futures for January delivery also fell sharply, settling at $58.57, down $2.15. And in London, January Brent crude futures declined by $2.07 to settle at $58.54 on the ICE Futures exchange.
In its latest weekly report, the Energy Department said Thursday that the nation's inventory of natural gas grew last week by 5 billion cubic feet to 3.45 trillion cubic feet, or 7.4 percent above the five- year average for this time of year.
Natural gas futures fell after the data were released, dragged down in part by what has so far been a mild autumn in the Northeast and Midwest, the major consuming regions for home heating fuels.
Nymex natural gas for December delivery slid by 36.5 cents to settle at $7.755 per 1,000 cubic feet.
The Organization of Petroleum Exporting Countries last month announced its intention to cut production by 1.2 million barrels a day _ 4 percent of its output _ to shore up oil prices, which have tumbled by more than $20 since a mid-July peak above $78 a barrel. The cartel has said it will cut output further at its December meeting if prices continue to fall.
Still, some market skepticism persists about how serious OPEC members are about actually reducing their oil sales at a time of historically high prices. To make matters more complicated, traders must sift through often conflicting reports from consulting firms that attempt to track shipments of OPEC crude.
At the same time OPEC is trying to tighten up the market, economic growth is slowing in the United States, the world's largest energy consumer. The International Monetary Fund forecasts gross domestic product for the U.S. to grow by 2.9 percent in 2007, a decline from an estimated increase of 3.4 percent in 2006.
In its monthly oil market report, released Wednesday, OPEC signaled particular concern about weakness in the U.S. housing market and its potential to spill over into other areas of the economy.
In other Nymex trading, gasoline futures declined by 5.25 cents to settle at $1.5296 a gallon, while heating oil futures fell by 3.19 cents to settle at $1.6605 a gallon.
On Wednesday, the U.S. Energy Information Administration said in its weekly report that inventories of distillate, which include heating oil and diesel fuel, fell by 3.6 million barrels last week to 135 million barrels. That is 6 percent above year ago levels.
The EIA reported that demand for distillates over the last four weeks has been the highest four-week average ever for any period that doesn't include January or February, when cold weather usually causes heating oil demand to peak. The EIA noted, though, that the high demand numbers could be caused by retailers and consumers buying fuel to pad their own inventories ahead of winter.
"This week's petroleum data can be interpreted by different analysts to reach totally different conclusions," the EIA said
bump
KEEP ON SINKING, KEEP ON SINKING!!!
sinking, what will the ex-enron electric traders that are now marketing in oil futures do?
Buy out the weather forecasters again?
My god they have expenses!
Who will pay for their lap dances?
Tell me about it, my main source of income relies on oil prices (I drive a taxi in NYC). When gas was up in the mid $3 bucks, I was losing anywhere from $500 to $600 a month income to gas, and I had EVERY freggin` liberal financial whiz on earth telling me it was going to $4 because of who else? BUSH! and Iraq..I said it was the demand, and like a wave it will go down and it did. Don`t know if that is the reason it went down, but that extra $125 a week is a Godsend. Damn man, there is nothing worse than having credit companies calling you ten gazillion times a day. You miss one payment and these pr*cks are relentless.
Not anymore: Liberals control the House and Senate because the majority of people in the US have IQ`s in the double digits, and Hellary will win in 2008 because Repubs still refuse to start promoting a viable candidate to combat the demon, so you might as well turn that graph upside down starting now to see what the next 3 years will look like.
Thanks for posting the article.
"This week's petroleum data can be interpreted by different analysts to reach totally different conclusions," the EIA said
TRANSLATION: "There is no longer anything politically to achieve, so things are back to normal now."
All thanks to Nancy Pelosi.
Based on the MSM reports you donot need the shhhhh.
I figure dems must like to pay more, gives them more to gripe about!
Fine, so why is the price of gasoline going up?
Good thing the lower oil prices helped the GOP in the mid-term elections.
the markets. I love them. they benefit even people who think they are evil without any malice whatsoever.
my 401 wants them to go higher. do not get me wrong. I have figured out how it works.
Prices NOT dropping here near Carson City.
Actually went up 14 cents/gallon in past 5 days.
Tell me, I truck lumber all over the nation. I am making an extra $500/mo thanks to the lower freight rates.
Pray for W and Our Troops
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