Skip to comments.Oil briefly falls below $50 per barrel
Posted on 01/18/2007 1:07:12 PM PST by NormsRevenge
NEW YORK - Oil prices briefly fell below $50 per barrel Thursday for the first time since May 25, 2005, after the government reported larger-than-expected jumps in crude oil and gasoline inventories.
Oil has dropped 17 percent since the end of 2006 amid weeks of mild winter weather in the U.S. Northeast, a key consumer of heating fuels, and growing energy stockpiles.
"There's no doubt that this is significant," said Phil Flynn of Alaron Trading Corp. "If you're a bull, the only thing you can hold your hat on is they didn't close below $50."
The price for a barrel of light, sweet crude for February delivery fell as low as $49.90 on the New York Mercantile Exchange but spent only a moment below the $50 threshold. It settled at $50.48, down $1.76 from Wednesday's settlement price.
Jim Ritterbusch, president of Ritterbusch & Associates, said prices could continue to fall toward $47 in the next two weeks, unless the Organization of the Petroleum Exporting Countries calls for a meeting.
"The market is still seeking a bottom," he said, "and we had another bearish element tossed at it in the form of these negative weekly statistics."
U.S. crude oil stocks rose by 6.8 million barrels to 321.5 million, according to a report by the Energy Information Administration. Analysts had been expecting an increase of just 325,000 barrels, according to a Dow Jones Newswires survey. The EIA said inventories are above the upper end of the average range for this time of year.
Gasoline inventories, meanwhile, rose by 3.5 million barrels to 216.8 million, above analysts' expectations of a 2.6 million barrel rise. Distillate fuel inventories, which include heating oil, rose by 900,000 barrels to 141.9 million barrels, compared with analysts' expectations of a 1.3 million barrel rise.
The EIA said inventories for both gasoline and distillate fuels are at or above the upper end of the average range for this time of year.
March Brent crude on London's ICE futures exchange fell $1.03 to $51.75.
Heating oil lost 2.9 cents to $1.4707 a gallon while natural gas futures rose 9 cents to $6.324 per 1,000 cubic feet.
Gasoline prices fell 2.3 cents to $1.3553 a gallon.
Earlier in the day, prices were buffeted by a recent cold spell in the Northeast U.S. and forecasts of slow demand growth from the International Energy Agency.
In lowering expectations for this year as well revising last year's figures downward, the Paris-based IEA cited mild winter weather that has crimped energy demand and weaker expectations for U.S. economic growth.
In its closely watched monthly oil market report, the energy watchdog forecast global oil demand growth this year of 85.77 million barrels a day, down 160,000 barrels a day. And it said oil demand growth last year was 120,000 barrels a day lower.
Oil powerhouse Saudi Arabia remans undeterred by crude's recent drop.
Saudi oil minister Ali Naimi, who earlier this week said he opposed calls from other OPEC members for new cuts in production, announced Thursday his country planned to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand.
Naimi blamed the sharp rise in global crude prices over the past two years mostly on "insufficient investment and rising energy demand," especially from the booming economies of Asia.
"The rise has been a wake-up call for the industry and for producers and consumers alike, who are now beginning to address deliverability problem head on," he said at an international energy conference in New Delhi.
But Yemen's oil minister, Khalid Mahfoudh Bahah, who was also attending the conference in New Delhi, said he expects oil price to average between $55 a barrel and $60 a barrel in the coming months.
Vienna's PVM Oil Associates said Naimi's opposition to further cuts for now may be a call to other OPEC members "for better compliance with the already agreed output reductions, the second of which has yet to come into effect."
OPEC has committed to a total cut in output of 1.7 million barrels per day, including a 500,000 barrel-a-day reduction set to begin Feb. 1. A survey by Dow Jones estimates OPEC has cut output by little more than half of its pledged levels. Production remains near 27 million barrels a day or about 700,000 barrels a day above OPEC's target.
Associated Press writers Gillian Wong in Singapore and George Jahn in Vienna, Austria, contributed to this report.
It's in OPEC's interests not to let prices get too high, because people start talking seriously about alternative fuels. Let's face it, oil is the only thing the middle east has going for it.
Sure wouldn't know it where I live in Connecticut. I paid $2.49 for regular today.
2.51 here this morning
$2.13 yesterday in south Georgia.
The price of gas where I live has dropped about 1.5 percent.
But had the price gone UP 17 percent, I am certain the price of gas would have followed like Slick following an intern.
Welcome to econ 101 and the rachet effect. :/
Where's 'here' for you? $2.49 was the cheapest I could find. Many stations I went by were $2.53 & $2.56.
Why don't we take away the value from their "one crop?"
San Jose, Ca
And what's become of the historical 20 cent spread between Regular and premium? Most places here now egde it up 25 or 30 cents.
But there's a station on Rt 3 (NJ) that has:
Overdosing on their own fumes, ya think?
"Welcome to econ 101 and the rachet effect. :/"
I feel where they are sticking that rachet :-O
$1.98 Cleveland Ohio
I wonder if I should sell my Exxon Mobil.
The lowest in Tulsa is $1.72 ...
Filled up at $1.92 here in Indy.
I'm really hoping & praying that it will be low $40'ish for many many years to come.
Re post #2. Exactly.
You said --
Well, the lowest in Tulsa has a price that was about $1.00 more a gallon on Premium than Regular Unleaded. That spread was so bad, I just couldn't see how they would ever sell that Premium...
P.S. -- The low price is $1.72
Been reading thru this this morning:
The hypothesis of abiogenic petroleum origin holds that most petroleum was formed from deep carbon deposits, perhaps deposits dating to the accretion of the Earth. The ubiquity of hydrocarbons in the solar system is taken as evidence that there may be a great deal more petroleum on Earth than commonly thought, and that petroleum may originate from carbon-bearing fluids which migrate upward from the mantle.
Various abiogenic hypotheses were first proposed in the nineteenth century; most notably, by the French chemist Marcellin Berthelot and the Russian chemist Dmitri Mendeleev. Since that time, these hypotheses have lost ground to the modern scientific consensus that petroleum is a fossil fuel.
Price of gas in Toronto has dropped over 30% (from $113 a litre to 73 cents last evening. Loving it!
Try reading the owner's manual on a BMW X5.
PREMIUM (91 octane minimum) FUEL ONLY
Maybe you should build some refineries there, instead of running them all out of state.
$2.29 for Chevron premium this morning in Dallas TX. Regular was $1.99.
You quoted -- "Since that time, these hypotheses have lost ground to the modern scientific consensus that petroleum is a fossil fuel."
But, it seems to be gaining some more ground these days, from what I've been reading. However, it does come under attack by the "Peak Oil" people. Whatever way it really is, though, I don't think will make a difference to whatever we'll see at the pumps.
I'm not. I *want* it to camp out at around $50-55/bbl, because then all these alternative energy systems will get funded and underway.
Which, if you hadn't figured it out, would cut the props out from under the Middle East and Venezuela.
$1.98 in Dallas.
1.88 in Manchester TN today. Yesterday on the way to Chattanooga from Nashville the same station was 1.97
That's your reward for buying an overpriced SUV with a BMW logo on it. :)
--And what's become of the historical 20 cent spread between Regular and premium?--
Back when regular was 19.9 cents, there was a LOT less that 20 cent spread.
$1.99 in Columbus, OH. yesterday.
--Well, the lowest in Tulsa has a price that was about $1.00 more a gallon on Premium than Regular Unleaded. That spread was so bad, I just couldn't see how they would ever sell that Premium... --
Quick Trip reporting
"I did see 2.35 at an ARCO station Tuesday....in Huntington Beach or Fountain Valley....that's in Orange County , California....."
shhhhhhhh...now Ernest, don't be spreading our little "bargain" secret around. LOL
Guys, we hit 2.29 this am in FV.
I think it is around $2.30 here in AZ.
I noticed that as well here in Arizona.
i paid $2.05 this morning here in Mobile...though on the front page of the paper it said one case station around her was below $2
I am gonna look again....I think I saw a Mobil station just off of the 405 with regular at 2.65....not sure where I was...maybe Edinger ...
Using an expiring futures contract price in such a way is fragrant opportunism and unworthy of serious journalism although perhaps appropriate to undergrad writers and other sophists.
Yeah, what's u with that? I wrote Exxon and told them my business is going elsewhere till they decide to do it right.
And if the spread ever goes that much here as where you posted I'll make my own super.
Oh, and if you ever fly into Orlando - DO NOT BUY GAS AT THE CHEVRON ACROSS THE STREET FROM HERTZ. This is just north of the airport on SR 436
These idiots had regular priced at $3.50, Plus at $3.65 and Super at $3.75. And this was just a few days ago. Probably the highest in FL and exists just to ripoff the tourists.
You said --
Quick Trip reporting
Well, QuikTrip is not the lowest price in Tulsa, unfortunately. The absolute lowest price is a few blocks down S Peoria (at I-44) where there are two stations at $1.72. Specifically, they are at 61st and S Peoria. Go down and take a look, if you don't think so...
AND, one of those stations is the one I was talking about, where they had (before, when I drove in to look at the prices) a disparity of *$1.00* between their Regular Unleaded and the Premium.
So, that's exactly where the price is at -- right now -- in Tulsa (for the lowest two stations).
A P.S. to what you said...
I personally do go to QuikTrip because they are a "Top Tier Gasoline" seller.
This is a standard (for gasoline and the proper additives) put out by the major car manufacturers, in order to keep the engines burning right with the emissions and not get those engines gummed up. Those manufacturers have said that not having the right amount of additives (and they get very specific about it, on their web pages) will lead to a fouled up engine, eventually.
So, I pretty much keep to Top Tier Gasoline..., and that is QuikTrip (for one).
Oh, one more thing... QuikTrip is down to $1.97 already -- and is headed downwards. Look for it to be even lower tomorrow (at least for QuikTrip). As I said, it's already down to $1.72 at other places.
2.07 in North, though it was 2.15 yesterday.
So, did anyone here buy any $70 put options on oil?
It seems like oil could go to $35/bbl.
Or if we have carriers and subs in the gulf to really do something; it will go to $90; at least for awhile.
I would hate to have the job of buying fuel for a large end user right now.
You asked -- "So, did anyone here buy any $70 put options on oil?"
I don't know about that, but my dad does own some oil and gas leases in Oklahoma (got them from his parents and I suppose I'll get them next)...
They just started another drilling project on one of those pieces of land in Oklahoma. We'll see what happens there. We got a "signing" bonus to sign up with the company and we'll see if they strike oil next...
Hugo Chavez has got to be in a panic. No communist utopia without $70 dollar oil to fund his workers paradise.
You said -- "PREMIUM (91 octane minimum) FUEL ONLY"
I wasn't so much talking about the requirement of owners to follow the fuel specified -- as much as I was saying that I would go to a station that had a 20-cent spread, rather than a $1.00 spread. So, if I were driving your vehicle, then I wouldn't get it at that station -- even though that particular station has the lowest price in Tulsa (for Regular Unleaded).
P.S. -- If you're concerned about your engine, you might also want to make sure it's a "Top Tier Gasoline", too --