Posted on 03/22/2005 12:52:31 PM PST by ambrose
Associated Press
Crude Oil Prices Plunge on Profit Taking
Tuesday March 22, 2:48 pm ET
By George Jahn, Associated Press Writer
Oil Prices Decline Sharply on Profit Taking, Possible OPEC Initiative to Cool Market
VIENNA, Austria (AP) -- Traders chalked up a sharp decline in oil prices Tuesday to profit-taking ahead of the U.S. government's next petroleum supply report.
With little news to push prices higher Tuesday, trader said the markets also may have keyed on a key OPEC member's reiteration that the group is considering raising its daily production quota by half a million barrels after a similar move last week.
Light, sweet crude for May delivery fell $1.41 to $56.05 per barrel in afternoon trading on the New York Mercantile Exchange.
"People have buying this market all the way up," said Mike Fitzpatrick, a broker at Fimat USA Inc. in New York. Tuesday's late-day selloff came at the end of what had been a relatively quiet day for the market and reflected the impulse of some traders seeking "instant gratification," Fitzpatrick said.
Fitzpatrick said these traders may get back into a buying mood Wednesday depending on the details of the Energy Department's weekly petroleum report.
Oil is roughly 50 percent more expensive than a year ago but still well below the inflation-adjusted peak above $90 a barrel set in 1980. Prices have risen by about a third so far this year, fueled by a late cold snap across the world's largest energy consumer, the United States.
They also have been underpinned by a weak dollar, which has made OPEC more comfortable with higher prices, and rising global demand at a time when there is very little excess supply available. These factors could set the stage for a more pronounced spike in prices if there is a production outage.
The Organization of Petroleum Exporting Countries, however, has indicated that it is willing to move to try to lower prices from current levels. Last week, the 11-member oil group said it was raising its daily output quota by 500,000 barrels in preparation for high-demand next winter in the Northern Hemisphere. Markets shook off the move, however, because it did not actually add more supply to the market.
On Monday, Saudi Oil Minister Ali Naimi said OPEC, which produces around 40 percent of the world's oil needs, was deliberating raising daily output by an additional half-million barrels.
Naimi, whose country is the organization's main producer, also said Saudi Arabia was prepared to unilaterally increase its output from the present 9.5 million barrels a day to 11.5 million barrels "if we have a customer."
Purvin & Gertz oil analyst Victor Shum said OPEC's decision last week to increase output in the second quarter, when demand typically drops because of warmer spring weather, will result in a much-needed global supply cushion.
"As the cushion expands from the current level, some market participants ought to start taking profits," he said in Singapore. "Pricing should ease a bit."
Some analysts, however, remain wary that there would be no actual addition to OPEC production, as the cartel was already producing above its quota.
Shum also cautioned that OPEC's zeal in increasing output might backfire, as it leaves little leeway in the supply chain for any output glitch.
Associated Press Writer Wee Sui Lee in Singapore contributed to this report.
Techies love that the Apr chart
Hey, just in time for Easter travel! Isn't that nice?
Nam Vet
EXCELLENT ARTICLE. There is absolutely no reason why oil is not trading at $25 or lower.
Spring is here. Warm weather everywhere except NE USA, and now they're heading into spring. Oil stockpiles are unusually high. Iraq and Libya are in play.
What a plung! lol
Er, that's the Law of Intended Consequences.
Where's "here"? I'm movin' :-)
Somehow I doubt that the outsourcers had in mind helping to drive an increase in oil prices.... I'll stick with "unintended."
I hear ya - Some serious thinking and decisions need to be getting implemented ASAP - A barrel of oil should be no where near even $45 - (between $25 and $35 is reasonable).
The energy traders are causing anywhere between $5 to $12 a barrel -
You wish! It may fall 5 cents a gallon --- IN A MONTH!
Wooo-hooooo folks ! It's over now !
Come'n down and check out our latest SUVs... Talk to
your dealer TODAY !
Just another benefit of "free trade"!
You can ride your donkey to Wal-Mart when gas is 5 dollars a gallon and still buy cheap Chinese communist garbage!
Free traitors are geniuses!!! /sarcasm
Yea, but they have to pay $56 a barrel, too. Less money for them to build nukes.
Some of those outsourcers did, in fact, have that in mind (they would be the ones behind $oro$ and the DemonRATs).
Why doesn't anyone mention GWB's weak dollar causing the boom in oil? If he he were a Democrat it would be common knowledge.
Dumping the taxes on fuel would be one helluva savings, however, this state is WAY too greedy for that!
Ping.
That's when it was!
Since people are apparently willing to pay $56/bbl, $56 certainly seems to fit the definition of "reasonable."
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.