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.
Sweet! So we are talking .005 cents a day or so... Im so pumped! WHOOO!
Expect the Dow to get pushed down to the 10,000-10,200 range by early April.Then the buy up will start driving the Dow and Nasdaq back up a few hundred points until the summer driving season in June than back down through the summer.
All us little guys are just running around the table hoping to catch the scraps that fall off.
You'll have to wait for Labor Day for that! (snicker)
Cheers!
I just paid $2.55 for diesel yesterday in California.
Boy did you ever screw up. Don't you know not to say something derogatory about WM in here?
Apt.
In a pure capitalistic system I could agree with you - But we don't have close to that - Therefore screwing the consumer isn't the answer -
The business sector has managed extremely well over the past 2 years with soaring energy costs - This will not last much longer (and the WH is well aware of it, they just need to respond). Energy costs are hurting small business big time (and silly Greenspan's interest rate hikes are another disaster looming)
The facts are the energy traders are hyping the market higher (kind of the new tech stock in a short-term manner) - And because we (America) continue to put oil into the SPR we make it extremely less risking on them - There is no reason we should be putting specked up $50 barrel oil into SPR (when if we simply stopped putting oil into SPR for less than a month the price would drop by $5 to $10) - So the taxpayers are getting doubled screwed - We are paying higher pump prices...and we are paying higher prices via out tax $$ into SPR -
Also it is not reasonable that we have not built a new refinery in over 20 years! - It is not reasonable that the WH did nothing when OPEC cut production in 2003 and 2004 (GWB and Cheney should have had much more influence then they pushed on the Saudi's - It was ridiculous for the Saudi's to go along with OPEC production cuts)
Lastly, in the short term "people" have NO choice but to pay what the pump says - But in time, you will have a slow down in the economy if these type higher prices continue (this is how recessions start) - Oil is the life blood of our economy - The notion that people are "willing" to pay for it is somewhat disingenuous - (especially so, when artifical means are upping the costs)
That is the last thing we want -
Those fuel prices did not have the same daily negative effect as todays prices do - (nor was there as much product being shipped - not even close) -
Also mind you, those prices brought on a terrible recession (which helped lead to other problems such as the misery index) -
The idea that prices aren't as bad now as then shouldn't be the goal - because even heading towards those "inflation" adjusted $$ simply means a guaranteed recession.
High energy prices (soaring to be exact) along with Greenspan's ridiculous interest rate hikes are a recipe for a recession - (thank god for GWB tax-cuts) -
Gas prices are hurting small business to a level that hasn't showed up yet - That is a fact.
Wal-Mart is the great destroyer of the American middle-class. They just paid an 11 million dollar fine for employing illegal aliens in their stores.
Wal-Mart can go to Hades IMHO...
"And these increases are considerable, especially this early before the "summer increases in price"!
I truly think the sky high price of gas was to put the brakes on our economy. I have watched family memebers be sent home from Germany because the dollar was purposely weakened by our treasury department.
There was no other reason, at that time for the dollar to fall then I learned the feds adjust the dollar basically as they see fit. Perhaps these days there is more to it, but I find it unlikely.
I think China is a nice place to lay the blame for our goverment and businesses involved in this ridiculous scam.
It is a scam of gigantic proportions... and I am not saying all big business, but you would have to live under a rock to not know this is true.
We are going down, its just a matter of when and who takes our place.. The greed factor is just too tempting for business and government to ignore. Why support this economy by employing workers at a fair wage when u can have a bigger house on the beach and an extra tropical vacation by supporting the Chinese.
And dont even start with the union whine. Puhlease...
Just remember when the socialist finally have their way, it was your greed that put them there...
Remember when our English teachers told us not to try to define a word by using that word in the definition?
Cool graph, Charlie! Can you or anyone else help me with the causes for some of key 'events' causing major price shifts?
IIRC: 1st jump in 1973 is OPEC deciding to put the rest of the world 'over the barrel' so to speak. That's when we had to so-called shortages and monster gas lines.
What about the highest spike in 1979? Is that Iran and Iraq duking it out?
And what happened in 1986 to bring prices back down to 'reasonable' levels?
Not to mention the fact that we sold our old, inefficient equipment and factories to them, they reassembled them in their country, and are now buying oil to run factories built here in the 1940's-1970's. We all recall how energy efficient everything was then (/sarcasm)
and they need to drill now. Then they have to build more refineries..
You must have filled up earlier in the day, it was $2.04 a couple of hours ago.
But I/people waste more money going out to eat and dont seem to care about it...I choose not to worry constantly about gas prices.
Speak for yourself my FRiend! : )
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