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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 05/30/2008 : 06:58:18
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Oil extends decline, prices below $126 a barrel
Friday May 30, 6:46 am ET
By Thomas Hogue, AP Business Writer
Oil prices fall below $126 despite drop in US crude stocks as investors eye dollar, demand
BANGKOK, Thailand (AP) -- Oil prices fell below $126 a barrel Friday in Asia, extending a decline of more than $4 in the previous session as a stronger dollar and falling demand outweighed an unexpected drop in U.S. crude oil stocks.
The U.S. Energy Department's Energy Information Administration said delays in unloading oil tankers along the Gulf Coast had led to the 8.8 million-barrel drop in crude oil inventories for the week ended May 23, lessening the impact of the report. Analysts surveyed by Platts had expected a gain of 750,000 barrels, and usually such a discrepancy would send prices soaring.
"The impact of it was lost," said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. "Their explanation for the decline of the crude inventories really countered the impact of the actual number."
Traders instead focused on gains in the U.S. dollar, analysts said, which hit a three-month high against the yen overnight and held near 105.50 in Asia currency trading in Tokyo. Late in the day, the euro was trading below $1.55.
Investors who buy commodities such as oil as a hedge against inflation when the dollar is falling tend to sell when the greenback strengthens. Also, a stronger dollar makes oil more expensive to investors dealing in foreign currencies.
Late afternoon in Singapore, light, sweet crude for July delivery was down $1.05 at $125.57 a barrel in electronic trade on the New York Mercantile Exchange.
The contract fell $4.41 to settle at $126.62 a barrel overnight, the lowest settlement in two weeks and the biggest single-day price drop since March 19. The contract is now down almost $10 below the all-time high it hit last week of $135.09 a barrel.
"The market has lost some attraction on the upside," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The surge in pricing was so fast and so much last week, some pull back is well deserved."
Concerns about U.S. gasoline demand weighed on prices, with many investors and analysts expecting record high retail prices to continue to impinge on American driving habits.
Energy high prices are cutting consumers' appetite for fuel, so demand fell slightly over the last four weeks, EIA data indicated.
And commentaries about how high oil prices are impacting airlines and driving habits, "actually maybe causing people to think oil prices are on a level where they are having a material economic impact," said Moore.
Airlines across the Asia-Pacific region are scrambling to cut flights and increase fares and fuel surcharges in bids to stanch losses. Fuel costs for airlines, which now typically account for up to 40 percent of total operating expenses, have already jumped more than 50 percent since the start of the year.
Even such sector leaders as Qantas Airways and Cathay Pacific Airways have had to consider cutting routes and reducing fleet sizes.
Also putting some weight on prices were supplies of distillates, which include heating oil and diesel fuel. The EIA said stocks of distillates rose 1.6 million barrels last week, double what analysts had expected.
In Washington, meanwhile, the Commodity Futures Trading Commission revealed that it is six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation. The CFTC also announced a handful of initiatives designed to increase transparency of the energy futures markets.
Disclosure of the investigation may have contributed to oil's declines, analysts said.
In its weekly inventory report, the EIA also said gasoline supplies fell 3.2 million barrels. Analysts surveyed by energy research firm Platts had expected an increase of 400,000 barrels.
In other Nymex trading, heating oil futures fell 6.45 cents to $3.624 a gallon while gasoline prices dropped 0.22 cent to $3.402 a gallon. Natural gas futures rose 0.1 cent to $11.475 per 1,000 cubic feet.
In London, July Brent crude fell 74 cents to $126.15 a barrel on the ICE Futures exchange.
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Think positive. |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 05/30/2008 : 10:00:51
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Demand in the U.S. will keep dropping as the price rises or stay high.
Demand in India and China will keep increasing. I think currently those governments are helping to keep the price low in the name of economic growth.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Frugi
Administrator
USA
627 Posts |
Posted - 05/30/2008 : 19:53:40
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$127.35 closing May 30
MARKET OVERVIEW ~ View Detail8:56 pm ETDow
MARKET OVERVIEW ~ View Detail8:57 pm ETDow 12,638.32 -7.90
Nasdaq 2,522.66 14.34
S&P 500 1,400.38 2.12
10 YR 4.05% -0.03
Oil $127.35 $0.73
Gold $891.50 $9.80
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fiatboy
Administrator
912 Posts |
Posted - 05/30/2008 : 21:38:57
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| Everyone's talking about supply, demand, and price gouging, but few ever mention the effects of inflation and monetary policy on the price of oil. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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tmaring
Penny Collector Member
USA
302 Posts |
Posted - 05/31/2008 : 08:10:20
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quote:
Originally posted by swusc
Demand in the U.S. will keep dropping as the price rises or stay high.-SWUSC
Yes, but demand for fuel is relatively inelastic in the short term. People can cut out extraneous trips, but you can't stop going to work. As fuel stays high for long periods (more than a few months) people may begin to make changes in their equipment (buy a car that gets better mileage) and if the price stays high for over a year or two, they may make major lifestyle changes, like moving to a dwelling closer to work, or finding work closer to home.
As economists would say, the demand for fuel is "price inelastic" in the short term, but price elastic in the long term.
This is what the Saudis fear... that if they keep the price high for too long we will adapt. If they keep bobbing the price up to gouge us for profit, then drop it again before we react in a meaningful way, they can maximize profits. You can be sure that they have analyzed the situation from a mathematical and psychological vantage to extract the greatest possible profit from their commoodity resource. |
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fb101
Administrator
USA
2856 Posts |
Posted - 05/31/2008 : 20:18:43
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| I keep looking at the price of gold and silver and wondering why it becoming apparent that $133 oil is inflationary, but $127 is not? I went to buy a bag of bird seed today and the price has gone from $16 to $26. Flowers are $17.50 a flat intead of $13? Am I in the twilight zone when the fed says there's little or no inflation? |
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tmaring
Penny Collector Member
USA
302 Posts |
Posted - 06/01/2008 : 10:54:16
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quote:
Originally posted by fb101
I keep looking at the price of gold and silver and wondering why it becoming apparent that $133 oil is inflationary, but $127 is not? I went to buy a bag of bird seed today and the price has gone from $16 to $26. Flowers are $17.50 a flat intead of $13? Am I in the twilight zone when the fed says there's little or no inflation?
Good observation!! Stick with your gut on that one, I think you're perceiving truth. Those of us in the manufacturing or materials processing trades (as well as many ordinary consumers) have noticed prices of everyday items rise dramatically, while the government continues to insist that inflation is very low. Basically, what they do is to constantly jigger the "marketbasket" that they use to calculate the inflation index in order to make it APPEAR to be low. They apparently deduce that it's more important for people to FEEL confident about the economy, than for the economy to ACTUALLY be worth having confidence in. After all... if people feel insecure they will slow spending, slowing the economy still further.
It's a shell game and we're all being played for suckers. |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/01/2008 : 17:03:00
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I don't think the basket has been changed in a major way for awhile.
The prices of cars are dropping so that offsets some of the increase in fuel. The problem is you more than likely have already locked in the price of the car. So you aren't getting that benefit until you buy another one.
Bigger household goods are drop too. I doubt you are likely to redesign your house though.
Computers/Tech stuff is always dropping. Isn't it some rule of thumb that computers double in speed/performance every 18 months or so? Even if the price stays the same that is going to be like -30% inflation.
Stuff you need is going up. Stuff that you don't need right now is possible dropping to help offset the inflation number.
Inflation isn't the increase in cost of living. Inflation is the increase in like goods over time. A lot of the productivity gains help inflation numbers, but really don't help people's view on cost of living (what people call inflation).
The computer example is a great one. Inflation was negative, but if you want a new computer the price was flat or cost of living 0%. That negative is helping to lower CPI, but it really doesn't help the pocketbook really.
Cost of living is likely running closer to 6% i would guess.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Oil extends decline, prices below $126 a barrel
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