Posted on 11/16/2005 2:33:08 AM PST by RWR8189
SYDNEY (Reuters) - Oil dipped to a four-month low under $57 a barrel on Wednesday as dealers braced for a fresh increase in U.S. oil inventories amid unseasonally warm weather.
U.S. crude fell as low as $56.82 a barrel in electronic trading, its weakest since July 21. It was trading down 2 cents at $56.96 a barrel by 0746 GMT, extending an 11-week slump that has wiped 20 percent or nearly $14 off prices.
London Brent crude was down 3 cents at $55.15.
Although some analysts continue to predict a turnaround once temperatures fall and if OPEC opts to cut back on high output levels, sustained mild temperatures and rising stockpiles are taking some sting out of a feared winter fuel shortfall.
U.S. weekly crude oil stockpiles are expected to rise 1.8 million barrels, keeping a healthy cushion above last year's levels, a Reuters survey showed. Last week, stocks were 13 percent above 2004 equivalents.
Distillate stocks, including heating oil, are seen rising 600,000 barrels on the week while gasoline supplies, which have been particularly low, should rise 1.5 million barrels.
The Energy Information Administration will release inventory levels for the week to November 11 at 10:30 a.m. EST
(1530 GMT).
"Things are flat ahead of numbers out of the United States after a surprisingly strong movement downwards yesterday," said Andrew Harrington, resources analyst at ANZ Bank in Sydney.
"People have relaxed because of the mild weather in the northern hemisphere, but with prices trending in the middle of the long-term average, and as most predictions are ultimately for a colder winter, my feeling is that people may just be whistling in the wind while the sun shines."
Mild conditions in Japan helped lift kerosene heating fuel stocks to a fresh two-year high, putting them nearly 13 percent above the year-ago level, industry data showed on Wednesday.
BELOW-PAR DEMAND
Crude prices have tumbled sharply as the industry recovers from two devastating Gulf of Mexico hurricanes and as refiners restock supplies thanks to milder demand, curbed by balmy northern weather and record energy prices.
The U.S. National Weather Service expects a third week of below-par demand for heating oil as unseasonably mild weather continues. Demand for oil products has been running about 2 percent below 2004 levels.
Analysts say any short-term recovery in crude prices would need to be driven by colder conditions alongside lower output from the 11 OPEC countries, which have continued to produce at full throttle since the height of the hurricane season.
OPEC officials this week downplayed speculation of a cut in output to stop falling oil, but have said that prices now reflect a recovering supply and demand balance.
The cartel's basket of crude has fallen to nearly $50 a barrel, a level some members say they are ready to defend.
OPEC-member Venezuela, typically hawkish on prices, said the cartel might need to consider cuts to offset the recovery in U.S. production from the hurricane-beaten Gulf of Mexico, now at 750,000 barrels per day (bpd), the highest level since the hurricanes knocked out the region's entire 1.5 million bpd.
OPEC next meets in Kuwait in December.
In response to a prolonged period of high oil prices, the U.S. Senate voted to repeal a $1 billion tax break for big oil companies earlier proposed to offset higher oil and natural gas exploration expenses.
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Unleaded Gasoline
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Heating Oil
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Natural Gas
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And T Boone Pickens said the price would never go down. Wishful thinking?
Slim Pickens said we would have $4.00 a gal gas by Thanksgiving.
Don't worry, I'm sure the price of oil will go up with the Thanksgiving weekend approaching. Fill your gas tanks up now!
This can't be; the Dems were all over the Sunday morning shows, harping about how oil and gas prices are at their highest. Who should we believe? </end sarcasm>
That's still pretty high.
Pray for W and Our Freedom Fighters
I payed $2.08 for gas this morning.
While deisel is 2.90 a gallon, unreal.
By the way, did I mention we are blue state with a governor that is a commie.
not only will it go down more, but the warm dry weather for the next 10 days means that people will be driving to Thanksgiving holiday visits wearing sweaters not coats and gloves. This will drop the price another 5-10 cents.
Give Maine to Ottawa and have done with them.
Didn't Saudi indicate someplace about a month ago that they thought the price should be in the 40's?
For instance, when oil is "abnormally" high, but rapidly dropping in price, buying for inventory is severely impaired; when "abnormally" high but rising, buying for inventory is stimulated. Both scenarios are positive feedback into the price of the supply/demand system when the supply is relatively inelastic - and tend to amplify the excursions in price.
A longer term view sees exponentially rising prices in the energy sector, oil, coal, natural gas, etc.
We have arrived, and it portends ever increasing prices for energy. I hope alternatives come on line quickly! At least for those folks who haven't invested a portion of their savings into energy stocks.
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