Posted on 04/29/2005 11:20:33 AM PDT by sully777
LONDON (Reuters) - Oil prices slipped lower on Friday, handing back the previous day's short-covering gains as traders focused on less encouraging economic growth figures from the United States.
U.S. light crude (CLc1: Quote ,Profile ,Research ) fell 57 cents $51.20 a barrel, while London Brent fell 39 cents to $52.09 (LCOc1: Quote ,Profile ,Research ) .
Prices have dropped more than 12 percent since April 4's $58.28 record high on U.S. crude, as near full-tilt OPEC production during the second quarter seasonal demand lull has built U.S. oil inventories to their highest since mid-2002.
Fears that high oil prices, which have closed above $50 a barrel every day of the last two months, will hurt economic growth were heightened by slower than expected U.S. GDP growth reported on Thursday.
Government data showed the U.S. economy expanding at an annualized rate of 3.1 percent in the first quarter of 2005, the slowest in two years.
"The key to sustainably lower prices is the continued availability of fresh barrels of oil and further signs of sluggish growth such as Thursday's below-expected U.S. GDP growth figure," wrote analysts at brokerage Refco.
"If recent reappraisals of the outlook for global economic growth this year continue to be downgraded, then it is possible to see oil revisit the upper-$40s. But we aren't out of the woods in terms of gasoline, given the typical seasonal peak in prices during the spring ahead of the summer driving season."
Fifty dollars a barrel has proved to be a supportive barrier to selling. Prices have failed to close below $50 on each of the three occasions that they have broken this barrier since Feb 22.
Aside from fears that gasoline supplies might tighten up over the summer, some traders are concerned that producers are ill-prepared to meet anticipated stronger demand this winter, especially in the event of any unexpected disruptions.
Strong production from OPEC's Middle East heavyweights has filled up storage in an effort to head off this possibility.
Commercial inventories in the United States, the world's biggest oil user, jumped 5.5 million barrels last week following the third-highest import flow total on record, data showed on Wednesday.
Crude oil stockpiles now stand nine percent above one year ago while gasoline inventories, which edged lower last week, are still running at the top end of the range for the time of year.
President Bush, who met earlier this week with Saudi Crown Prince Abdullah, said on Thursday that his administration would encourage oil producers to maximize output.
Producers from the Organization of Petroleum Exporting Countries (OPEC) said this week they were doing all they could to fully supply the market in a bid to cool prices.
"...Crude oil stockpiles now stand nine percent above one year ago while gasoline inventories, which edged lower last week, are still running at the top end of the range for the time of year..." [Snip]
Prices did not drop by the same percentage as the speculative price of crude, but as soon as the speculation for June July rose again, the price for a gallon of unleaded jumped twelve cents within hours.
Meanwhile, the economy has slowed significantly since the oil bubble started. Hope the speculation BS ends soon.
I wonder how this affects the Chinese economy. The stronger their economy, the more oil they use, and the more expensive it will be for us.
Thats for sure. Over the last few weeks I've watched oil and gasoline futures repeatedly drop throughout the day, only to rally in the last half hour on speculation. I hope these chumps get burned bad...
Mike
Dingy Harry Reid is deeply saddened. If oil goes below $50 he'll need to be placed on suicide watch.
"given the typical seasonal peak in prices during the spring ahead of the summer driving season."
What the writer fails to mention here is the reason for the 'typical season peak in prices' has less to do with the price per barrel as it does with the Government mandated 'blends' forced upon us by the Enviromentalists.
Do away with the 19 or more different blends and the price per gallon would drop dramatically.
I see from the headline, that Reuters is shifting seamlessly from the "The US economy is overheated, spurring inflation fears" storyline to the "The US economy is stagnant, spurring unemployment fears" storyline.
BINGO! WE HAVE A WINNER! GIVE THAT MAN A CUPI DOLL!
Oil Below $50/Barrel! (Is Bush's energy policy working THAT quickly?!) the answer is simple: the Saudi's are trying to ease the pain so Americans will roll over and not get serious about a long-term energy policy. This is a direct result of President Bush's energy speech. The Saudi's have killed the goose that lays the golden rip-off eggs. With this sudden/massive drop they are trying hard to manipulate us into going back to sleep re: dependence on foreign oil. The Saudi's et, al are trying to put the gini back in the bottle. They are trying to circumvent the USA from getting their monkey off our back.
Presidnet Bush, hammer this home, make the repukes in the congress and senate toe the line on this one. Americans are sick of being held by the ba--s and squeezed hard everytime the Saudis and their cohorts want to buy a new Mercedes or 300 foot yacht.
I believe high oil prices hurt the less developed countries such as China much more than the US, because more developed countries use energy more effienctly and higher productivity.
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.