Oil price dives (Continuing )

Reuters UK ^ | Fri 3 December, 2004 15:42 | Reuters Staff

[Ernest_at_the_Beach]

LONDON (Reuters) - Battered oil prices have dived another dollar after weak U.S. jobs data deepened a slump driven by easing worries about winter supplies.

U.S. crude oil futures fell by $1 to $42.25, while London Brent fell $1.15 to $39.

Over the past three sessions, prices have fallen nearly $7, the fastest fall since January 1991, during the first Gulf War.

Since October's record peak of $55.67, prices have sunk by more than $13 and U.S. prices are back to levels last seen in September, while Brent is hovering around prices hit in July.

The renewed sell-off on Friday followed U.S. Labor Department data showing only 112,000 new U.S. jobs were created in November -- the weakest performance since July and well below Wall Street economists' forecasts.

The indication of slowing U.S. economic growth suggests falling demand for oil, which has already sunk in value as high OPEC production rebuilds inventories and high fuel costs bite into demand.

But more bullish analysts say growth in the United States is still robust and a sudden snap of cold weather would revive concerns about thin stockpiles.

"I still think the States is doing well economically, especially if you consider that we had $50 oil last month," said Edward Meir of Man Energy.

"Not that much has changed. Things could turn around quite quickly if we get a cold snap."

SYNCHRONISED GROWTH

Oil's rally this year was driven by synchronised economic expansion in the United States and China. This generated the fastest fuel demand growth in a generation, running down inventories and squeezing spare capacity.

While the supply cushion remains relatively low, mild weather in the U.S. Northeast -- the biggest regional heating oil market in the world -- and higher output from refiners coming out of maintenance has soothed worries about supplies of winter fuels.

This week's sell-off was triggered on Wednesday by a U.S. government report that showed distillate stocks, including heating oil and diesel, rose by 2.3 million barrels, helping to narrow the supply deficit compared with last year.

Overall crude stocks are already well above last year's levels as OPEC oil nations produce at the highest rate in 25 years.

The Organisation of the Petroleum Exporting Countries is to meet in Cairo on December 10 to decide output policy for the first quarter of next year.

Some members want the output spree to continue, though the cartel's second biggest producer Iran has advocated a clampdown on production above official quotas to avoid a winter stock-build.

OPEC's reference crude basket fell to $35.42 a barrel on Thursday from $38.03 the day before, OPEC said on Friday.

The fall takes OPEC's crude to just $3.50 a barrel over the top of the $28-$32 target, identified by OPEC's President Purnomo Yusgiantoro on Friday as an acceptable range for the cartel's crude.

Other ministers have indicated a basket price around $30-$35. The current target is $22-$28 a barrel, but most officials have said this range is now outdated.

The basket, made up mostly of heavy high sulphur crudes, is valued at a large discount to benchmark low sulphur grades like Brent and U.S. crude.

[Petronski]

I think they meant this:



Battered oil prices have dived another dollar (after weak U.S. jobs data deepened a slump) driven by easing worries about winter supplies.


Then again, who knows?

[kellynla]

"We need a daily check of Gas prices across the State...."
you asked for it
here it is! how's that for service! LOL
1.99 in Santa Ana
http://www.gasbuddy.com

[Petronski]

Put more accurately:

Battered oil prices have dived another dollar (after weak U.S. jobs data had already deepened a slump), driven by easing worries about winter supplies.

[Wolfstar]

Then again, who knows?

Ain't that the truth. After all, it's Reuters.

[Ernest_at_the_Beach]

Thanks, I am p[aying too much!

[Ernest_at_the_Beach]

Back in the home country Kansas side of Kansas City:

PRICE

STATION

AREA

TIME

THANKS

1.75

Phillips 66
9440 Mission Rd (95th & Mission Rd)

[blam]

"I just paid $2.02 at Sam's Club in Folsom this AM!"

Regular, unleaded is #1.83 a gallon here in Mobile.

[Dec31,1999]

Before the election there was a lot of uncertainty. Markets hate uncertainty; therefore the higher price. Barring a world wide recession, oil prices will remain at their high level or even go higher. The $20 barrel thing is gone forever, IMO.

[NormsRevenge]

$2.09 is the cheapest I could find yesterday as I drove around the South Bay...

[Faith-Hope]

I think I will begin to see unleaded in the $1.60 range here real soon. Nice.

Gas dropped where I live ten cents today. $1.63

[Petronski]

And where do you live?

[Ernest_at_the_Beach]

I have some Arco stations around going for $2.13 and Mobil stations at $2.19.....

Driving to Santa Ana would be a pain...

[RamingtonStall]

Ref: In addition to that, most people don't stop to think that with the dollar going down in value if all things were equal a commodity like oil would correspondingly go UP in cost. The falling oil prices are even more dramatic than they look to us here in the U.S.

Wow!

Even worse than even I had thought.

RamS

[JoeV1]

Of course you are right but the media thinks their version is more "interesting" then the truth.

[Grampa Dave]

When prices are dropping like they have been since Thanksgiving, it might be best to only fill up with half of a tank at a time if you have that option.

[RamingtonStall]

Before the election there was a lot of uncertainty. Markets hate uncertainty; therefore the higher price. Barring a world wide recession, oil prices will remain at their high level or even go higher. The $20 barrel thing is gone forever, IMO.

You are kidding, right?

The Talking heads would like for you and me to believe that the price of Oil went up for all of the reasons you stated and, quite frankly, your statements make perfect sense, EXCEPT for the fact that now the Price Manipulators have left and the prices are going South from $60 to $40 to ???

RamS

[70times7]

That makes a certain amount of sense, except that if all gas stations are constrained to similar extent by the actual cost of gas on the downward side, then one could make money by NOT jacking the price on the upside – at least not as greatly as the other stations – and pull in volume sales at a slightly increased margin of profit. This competition, at least in theory, should push stations to keep prices consistent with actual gas costs.

[70times7]

You're blaming the wrong party.

Although I did implicate both the stations and the manufacturers I wasn't blaming anyone, I was asking for an explanation. BTW, a 1 cent per gallon increase in gas translates to millions per year for my employer. It's only a penny - how could that be? I’m sure you can figure it out, bro!

[dangus]

Yes, except for the true cost of something is the cost of replacement, which has already jumped as soon as the price of oil jumps.

[70times7]

... so the price would come down right away on the downward side - cost of replacement applied. And all of those people waiting to fill their tanks would go to the station with the reduced price, just as you have said.