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Posted on 09/16/2005 2:48:32 AM PDT by RWR8189
SINGAPORE (Reuters) - Oil eased further below $65 on Friday on fears that record high prices are undermining global demand, overshadowing nagging worries about refined fuel supplies in the United States, the world's top consumer.
U.S. light crude was trading down 26 cents at $64.49 a barrel by 0515 GMT, extending a loss of 34 cents on Thursday.
London Brent crude slipped 16 cents to $63.50 a barrel.
U.S. prices have fallen sharply from a record high $70.85 on August 30, just a day after Hurricane Katrina hit the U.S. Gulf Coast, toppling oil platforms and shutting down refineries.
Oil's relentless rally -- adding 49 percent this year -- has been checked by fears of slowing demand growth, reinforced this week by U.S. data showing a decline in weekly gasoline use.
The Organization of the Petroleum Exporting Countries (OPEC) on Thursday cut its forecast for oil demand growth this year due to the impact of rising costs, which have triggered muted protests in Europe and fiscal woes in parts of Asia.
OPEC, pumping at its highest rate in a quarter century, will consider increasing output when it meets next week, but leading members say they see little hope of more crude supplies easing prices inflated by a feared shortage of refined fuels.
"It will be more of a political move on the part of OPEC to calm high oil prices," said Tony Nunan, a manager at Mitsubishi Corp. in Tokyo.
Analysts say crude stocks are still abundant and refiners have no need of extra supplies, an argument supported by the U.S. government's sale of only 11 million barrels of emergency reserves, about a third of the total it had offered.
They say the ongoing loss of some 840,000 barrels per day (bpd) of U.S. Gulf of Mexico production has been offset by the closure of four refineries with a capacity about 880,000 bpd -- three of which may be shut for months.
"Perhaps a physical increase in OPEC production is warranted -- but only if refinery demand is restored," said Citigroup in a research note
Reinforcing the view that global supplies are sufficient to avoid an energy crisis, the International Energy Agency decided on Thursday not to extend or expand its 30-day global release of emergency stockpiles, meant to head off U.S. fuel shortages.
A U.S. official had said Washington would not ask for more oil after the IEA authorized a 2 million drawdown, about two-thirds of that in the form of crude oil.
"The IEA governing board has decided to maintain its action of making available to the market 60 million barrels of oil and oil products for a period of 30 days," an IEA statement said.
The agency will next review the plan in late September or in early October.
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Who knows WTF is going on! I hear one mouthpiece for a big name brand financial house say oil will be $35 a year from now and another mouthpiece for another equaly big name brand finincial house say it will be $100 in a year.
I don't understand. The price went up and then demand went down? What the hell kind of system is that?
The price corrected itself before we even got to create a government program! We can't have that!
Leni
Gold at $458, 17 yr high...
I saw $2.79 gas yesterday. It's slowly coming down in PA, but how far?
"...but leading members say they see little hope of more crude supplies easing prices inflated by a feared shortage of refined fuels. "
Herein lies the real problem - we have maxed out our refining capacity. Thanks due to the tree-hugger crowd, no ne refineries have been built in the past 30 years.
Gold is going to increase as financial institutions shift from investing in oil to gold.
As more financial firms and non-oil industry investors get out of the oil market, prices will stabilize at the levels that could be considered "natural".
Which will further lower the price of oil. Of course gold prices tend to predict inflation, so high gold could be a sign of increasing inflation.
That will be great news to those that bought it at $800 an ounce in 1980. Heck, if they live long enough for it to get to $500 they'll only lose $300 an ounce...except for those that bought it at the peak of $870.
And while we're on the subject, why do gasoline retails still get to sell gasoline at X-point-nine cents per gallon? I mean, it was marginally understandable when gasoline sold for 20 or 30 or even 40 cents per gallon, but now that it's more than $2 per gallon, it's just silly.
If it takes a federal law to change this silly practice, then I'm for it.
DROP THE 9/10 OF A CENT!
Fact is no one knows.
While I include myself in that category my experience tells me that the true market price of oil should be in the range of $42 as we've seen a bubble develop over the last year.
The market is not always rational, especially the oil market for some reason and I'm betting it's going down or at least I have sold my long positions. I missed the top by a point or two, but I rarely can pick the absolute top or bottom.
I am reminded of the chatter when oil hit $10 a barrel. The market was acting like it was going to $0 a barrel. The mania in that direction would have been, had it not been so tragic for small drillers, funny.
And there's a bit of hope in my $42 dollar prediction. At that price is makes sense to restart production on a lot of existing marginal wells (anything lower and the expense of extraction makes it a money loser) as well as making new drilling financially attractive.
Gas was down to $ 2.65 yesterday outside of Des Moines, Iowa.
I agree completely!
I think gold follows inflation rather than acts as a leading indicator, so I don't think rising gold prices now will indicate that there is inflation.
Oil prices will depress as non-oil industry buyers (speculators) seek a less volatile market in which to preserve their money. Gold is a solid investment, as well as a lot of the mutual funds out there.
I'm hopeful that some of the money will go into the stock market and hopefully into new ventures, or the expansion of companies with potential.
An investigation into futures trading should commence. I would not be surprised to find George Soros and his friends have been playing the markets.
It is called trying to "influence" the market for financial gain.
You do know they will not drop the 9/10 but rather add 1/10.
I never could figure out the .9 either. I'd aso like to see it go.
LOL. Anything to make money. Even my 13 yr. old liked that.
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