Oil falls as contract expiration nears

CNN ^ | 04/21/09 | Ben Rooney

[Abathar]

NEW YORK (CNNMoney.com) -- Oil prices fell Tuesday as investors respond to the expiration of the May futures contract and ongoing economic concerns.

Light, sweet crude for May delivery was down $1.06 to $44.85 a barrel in pre-market, electronic trade in New York. The May contract, which expires Tuesday, tumbled nearly 9% in the previous session. Oil for June delivery was down $3.96 to $48.51 a barrel.

Trading is often volatile in the days leading up to the expiration of monthly futures contracts as investors not wishing to take delivery of physical oil roll positions into the front-month contract.

Meanwhile, stock futures were pointing lower, suggesting a sluggish opening for Wall Street. Stocks tumbled Monday as investors focused on the grim outlook for U.S. banks.

Many oil traders view the stock market as a proxy for overall economic conditions and, as a result, oil prices often rise and fall in tandem with the major indexes.

At the same time, the oil market also takes its cues from the currency market. Oil, like other commodities, is priced in U.S. dollars and a weaker greenback can make crude a more attractive investment to overseas investors.

The dollar was mixed against rival currencies Tuesday morning, after a broad rally in the previous session.

Investors also remain focused on weak demand for petroleum products and rising inventory levels as the economy sputters. Oil prices have plummeted more than $100 a barrel since last summer's all-time high.

"Demand has been very weak and U.S. inventories are high," said Tom Pawlicki, energy analyst at MF Global in Chicago, in a research report.

[Abathar]

[tet68]

Oil prices have plummeted more than $100 a barrel since last summer’s all-time high.

Gee, you don’t suppose the previous administration’s
efforts at drilling our own oil had anything to do
with it?

[pburgh01]

Well we need the reverse baramoter and the enviroleft’s new butt boy T. Boner Pickens to say it’s going to 200 bucks a barrell. The guy is worse than Lee Corso is picking NCAA football games.

[PSYCHO-FREEP]

The Bush administration had a very minor part in last years high prices. Supply and demand and a very large number of speculators involved with the market, is what drove those prices so high.

Currently, the speculators have been severely injured and have run for cover. Also, the fact that supplies are very high now, thanks to those higher production rates last year, and the economy is deeply injured so the public is going to fewer places and spending much less. Manufacturing that uses oil byproducts for plastics, fabric, rubber, etc, is also way, way down.

This trend will become it's own worst enemy eventually. The rapid shut down in oil exploration and production, will soon cause massive shortages, rationing, artificial price controls, etc. Especially with the gross incompetence of the Obama administration, who sees this as an “opportunity” to funnel all increased tax revenues on oil, to create their “renewable” pixie-dust energy scams.

Much higher prices are coming soon, believe it, and they will not be economically driven, they will be caused by government stupidity and nobody will benefit except a few corrupt and rich Liberals.