Fuel prices...the penny just dropped. - Page 2

JamesP · 15th July 2008, 18:03

May have more to do with President Bush demanding congress to agree to re-start off shore drilling....but lets hope this is the start...

Oil Falls Most in 3 Years as Slowing Economy Threatens Demand

By Margot Habiby

July 15 (Bloomberg) -- Crude oil tumbled 5 percent, the most in more than three years, amid concern that a slower U.S. economy will curtail demand for oil and gasoline.

Oil futures dropped as Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen, in testimony to the Senate Banking Committee.

``We're getting to the point where the market's looking at an increasing likelihood of a deep recession,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

Crude oil for August delivery fell $7.38, or 5.1 percent, to $137.80 a barrel at 1:13 p.m. on the New York Mercantile Exchange. It was the biggest percentage drop since Dec. 27, 2004. Oil fell as much as $9.26 to $135.92 today. Futures reached a record $147.27 a barrel on July 11 and have risen 86 percent in the past year.

``When it traded below $140, a big wave of selling hit,'' said Addison Armstrong, director of market research at TFS Energy LLS in Stamford, Connecticut. ``The market was trading a little bit above $140, and when it traded below, it fell something like $2 in a minute. Nothing seemed to hold it. There seems to be a bit of a panic.''

U.S. gasoline demand has fallen for 11 consecutive weeks through July 4, amid record pump prices which topped $4 a gallon for a fourth consecutive week, according to MasterCard Inc.

The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world's oil, said it expects demand for its members' crude will fall in 2009 as the global economy slows. Demand for OPEC crude next year will average 31.2 million barrels a day, a drop of 710,000 barrels a day from the forecast for 2008, the group said in its monthly oil market report today.

Economy Versus Dollar

``The whole U.S. economic scene is sort of being questioned and obviously that would say something about the demand for oil,'' said Paul Tossetti, director of oil market analysis at PFC Energy in Washington. ``Economic worries have completely pushed out of the way this weaker U.S. dollar.''

Earlier, oil rose amid an expectation that the dollar's drop against the euro would boost the appeal of crude as a currency hedge.

The dollar fell to an all-time low of $1.6038 per euro in London from $1.5908 yesterday. The rising appeal of commodities caused by the declining value of the dollar has outweighed concern that an economic slowdown in developed countries will cut demand for oil.

Also pressuring prices, Petroleo Brasileiro SA, Brazil's state-controlled oil company known as Petrobras, said it resumed normal crude production at the Campos Basin after a strike that began yesterday.

The U.S. National Hurricane Center said today that a low- pressure system in the Atlantic Ocean is less likely to develop into a stronger storm known as a tropical depression, which can be a precursor to a hurricane.

Storm Threat

The system, which traders were tracking yesterday as a possible threat to Gulf of Mexico output, ``still has the potential to become a tropical depression within the next day or so,'' though ``conditions are becoming less favorable for development,'' according to an advisory at 8 a.m. New York time.

Brent crude oil for August settlement fell $6.23, or 4.3 percent, to $137.69 a barrel on London's ICE Futures Europe exchange, after touching $134.96 a barrel. The August contract, which expires tomorrow, reached a record $147.50 on July 11. The more widely held September contract dropped $6.53, or 4.5 percent, to $138.80 a barrel. It touched $136.20.

``It's time for everyone to reassess where this market is headed and whether the try for $150 is worth the risk,'' Tim Evans, an energy analyst for Citi Futures Perspective in New York, said in an e-mail. ``Today's answer is no!''

To contact the reporter on this story: Margot Habiby in Dallas at [email protected]

Last Updated: July 15, 2008 13:40 EDT

15th July 2008, 18:03	#11
JamesP Loves to post Rover 75 ConnSE CDTi 131 Starlight Silver Join Date: Jan 2007 Location: Truro Posts: 354 Thanks: 0 Thanked 0 Times in 0 Posts	Some Good News May have more to do with President Bush demanding congress to agree to re-start off shore drilling....but lets hope this is the start... Oil Falls Most in 3 Years as Slowing Economy Threatens Demand By Margot Habiby July 15 (Bloomberg) -- Crude oil tumbled 5 percent, the most in more than three years, amid concern that a slower U.S. economy will curtail demand for oil and gasoline. Oil futures dropped as Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen, in testimony to the Senate Banking Committee. ``We're getting to the point where the market's looking at an increasing likelihood of a deep recession,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. Crude oil for August delivery fell $7.38, or 5.1 percent, to $137.80 a barrel at 1:13 p.m. on the New York Mercantile Exchange. It was the biggest percentage drop since Dec. 27, 2004. Oil fell as much as $9.26 to $135.92 today. Futures reached a record $147.27 a barrel on July 11 and have risen 86 percent in the past year. ``When it traded below $140, a big wave of selling hit,'' said Addison Armstrong, director of market research at TFS Energy LLS in Stamford, Connecticut. ``The market was trading a little bit above $140, and when it traded below, it fell something like $2 in a minute. Nothing seemed to hold it. There seems to be a bit of a panic.'' U.S. gasoline demand has fallen for 11 consecutive weeks through July 4, amid record pump prices which topped $4 a gallon for a fourth consecutive week, according to MasterCard Inc. The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world's oil, said it expects demand for its members' crude will fall in 2009 as the global economy slows. Demand for OPEC crude next year will average 31.2 million barrels a day, a drop of 710,000 barrels a day from the forecast for 2008, the group said in its monthly oil market report today. Economy Versus Dollar ``The whole U.S. economic scene is sort of being questioned and obviously that would say something about the demand for oil,'' said Paul Tossetti, director of oil market analysis at PFC Energy in Washington. ``Economic worries have completely pushed out of the way this weaker U.S. dollar.'' Earlier, oil rose amid an expectation that the dollar's drop against the euro would boost the appeal of crude as a currency hedge. The dollar fell to an all-time low of $1.6038 per euro in London from $1.5908 yesterday. The rising appeal of commodities caused by the declining value of the dollar has outweighed concern that an economic slowdown in developed countries will cut demand for oil. Also pressuring prices, Petroleo Brasileiro SA, Brazil's state-controlled oil company known as Petrobras, said it resumed normal crude production at the Campos Basin after a strike that began yesterday. The U.S. National Hurricane Center said today that a low- pressure system in the Atlantic Ocean is less likely to develop into a stronger storm known as a tropical depression, which can be a precursor to a hurricane. Storm Threat The system, which traders were tracking yesterday as a possible threat to Gulf of Mexico output, ``still has the potential to become a tropical depression within the next day or so,'' though ``conditions are becoming less favorable for development,'' according to an advisory at 8 a.m. New York time. Brent crude oil for August settlement fell $6.23, or 4.3 percent, to $137.69 a barrel on London's ICE Futures Europe exchange, after touching $134.96 a barrel. The August contract, which expires tomorrow, reached a record $147.50 on July 11. The more widely held September contract dropped $6.53, or 4.5 percent, to $138.80 a barrel. It touched $136.20. ``It's time for everyone to reassess where this market is headed and whether the try for $150 is worth the risk,'' Tim Evans, an energy analyst for Citi Futures Perspective in New York, said in an e-mail. ``Today's answer is no!'' To contact the reporter on this story: Margot Habiby in Dallas at [email protected] Last Updated: July 15, 2008 13:40 EDT