Oil falls $1 as commodity sell-off continues ($67.60/bbl)

Reuters ^ | May 22, 2006 | Simon Webb

[RWR8189]

LONDON (Reuters) - Oil prices fell $1 on Monday to a six-week low as concern that inflation may slow economic growth encouraged selling across commodities markets.

U.S. crude was trading 98 cents lower at $67.55 a barrel at 0819 GMT after falling more than $1 to its lowest level since April 10. Brent crude was down 84 cents at

$67.85.

The drop added to a slide of nearly 5 percent last week after signs that the record cost of many raw materials was pushing up the cost of living and hitting consumers' pockets.

Rising inflation may force central banks to target higher interest rates, in turn slowing growth and cutting demand for commodities.

"This is a continuation of the bubble-bursting in commodities and energy markets last week," said Christopher Bellew of Bache Financial in London.

Other commodities also slipped on Monday. Silver fell over three percent to a four-week low while gold dipped just under three percent.

"Oil prices have suffered a hangover with the fall in other commodities," said David Thurtell, commodities strategist at the Commonwealth Bank in Sydney. "They were too far out of line with fundamentals and could still have further to fall."

RISING GASOLINE STOCKS

Weakness on gasoline futures added to the slide. U.S. gasoline fell over three cents to $2.0069 a gallon.

U.S. government data last week showed domestic motor fuel stocks rose for the third consecutive week. Rising stocks have helped alleviate concern that changes to cleaner-burning fuels might cause supply problems during the peak-demand summer driving season.

The dispute between Iran and the West over Tehran's nuclear dispute rumbled on at the weekend.

The United States said it made no sense for it to offer assurances that it would not try to overthrow the Iranian government if Tehran agreed to a Europe-backed package of incentives to give up its nuclear ambitions.

Diplomats have said that Europe wanted Washington to provide some kind of security framework to back the package but U.S. Secretary of State Condoleeza Rice said it had not been asked to do so.

Iran has said it could not trust such guarantees anyway.

Fears that output from Iran could be disrupted by the row pushed U.S. oil prices to a record of $75.35 in April.

OPEC looks set to keep its output policy unchanged at its meeting next week in Caracas.

The Organization of the Petroleum Exporting Countries has been pumping close to full tilt for a year now in response to buoyant demand, but has been able to do little about high prices.

Iran's OPEC governor Hossein Kazempour Ardebili said on Friday that OPEC supply limits were unlikely to change, even though fundamentals suggested oversupply and that the market could absorb an output cut of up to 1.2 million barrels per day.

Actual OPEC production has been reduced by militant unrest in Nigeria, with attacks taking out one quarter of Nigeria's exports, although Royal Dutch Shell told Reuters on Friday that it expects to return to its abandoned fields "sooner rather than later."

[RWR8189]

Light Sweet Crude Oil

5/22/2006 Session Contract Detail for June 6

	Last				67.60
	Open High				68.45
	Open Low				68.45
	High				68.89
	Low				67.42
	Settle				68.53
	Change				-1.85
	Open Interest				56729
	Volume				0.00
	Last Updated				05/22/2006 04:48:26

 

[familyop]

Enjoy it while you can, commuters, and do save.

[Rte66]

Just wait till school's out.

[familyop]

IMO, Iran's only a short term consideration, if we take out its nuclear facilities soon enough. In the long term, we will likely see more fuel consumers in the world as time goes on.

[dennisw]

Ahmedinejad's rants add 20$ to the crude price. Feral Muslim thinking at its finest.

[backhoe]

Good news- link to a "click the pic" link with a million more links on energy-related matters:

http://www.freerepublic.com/focus/f-news/1630252/posts?page=47#47

[MaDeuce]

So I guess it won't be long till a gallon of gas or diesel is down to $1.099 right?

[Proud_USA_Republican]

Appears Iamjihad's words are starting to be accepted as the hot air that they are.
Sooner or later, his words were going to be come one big hum like the adults from Charlie Brown animated shows.

[dennisw]

Gold is deflating too today.
Ahmedinejad was jacking up crude prices with his obliterate Israel rants. Much mo money for the Mo worshipers

[NavyCanDo]

But yet here in the Pacific Northwests the price at the pump keeps going up.
In my Zip code
Lowest 3.17
Average 3.21
Highest 3.27

[trubluolyguy]

Shoot, just wait until Memorial Day weekend.

[trubluolyguy]

But yet here in the Pacific Northwests the price at the pump keeps going up.
In my Zip code
Lowest 3.17
Average 3.21
Highest 3.27

---

Same here, but we have higher gas taxes than most.

[The South Texan]

Wait till the first Tropical Storm or Hurricane gets into the Gulf. No matter what the strength, the Jackals known as the commodity traders will bid up the price, big time. The perfect excuse for traders with Rat ties to hurt Bush going into the election season with high gas prices.

[SierraWasp]

Very informative posting!!!

Man... We've got it ALL in CA!!! Taxongas, Reformulated Gas and inflation adjusted prices that are still throught the danged roof!!!

Oh! And one more thang... A Governor that's got his head up the Hydrogen Highway for his Hydrogen Hummer, yet won't buck the EnvironMentalist GANG-GREEN to let us grow Nuclear Plants for enough "cheap" energy to create a break-up between Hydrogen and Oxygen in H2O!!!

HELP!!! WE NEED A CONSERVATIVE GOVERNOR WITH A BRAIN!!!

[ThinkDifferent]

The perfect excuse for traders with Rat ties to hurt Bush going into the election season with high gas prices.

In which case you can make a fortune by betting against them.

[B Knotts]

You also have ridiculous anti-diesel regulations that have the effect of promoting higher fuel usage and CO2 emissions.

And the idiot governor up here in Oregon is trying to adopt the California emission standards!

[Amerigomag]

I'd settle for a simple conservative.

[SierraWasp]

What we've got is... Barney Google, with his goog goog googley eyes that are bigger than his liberal bond and spend stomach!!! (puke!)

[Amerigomag]

Just came from Portland. Self-serve would help your predicament. The mandatory attendant adds at least a dime to the cost of each gallon in Oregon.