Posted on 06/08/2006 6:41:56 AM PDT by BenLurkin
VIENNA, Austria (AP) -- Oil prices fell below $70 per barrel Thursday for the first time in two weeks following the announcement of the death of al-Qaida's leader in Iraq, terrorist leader Abu Musab al-Zarqawi.
Word by Nigerian militants that they would release foreign hostages and an easing of world tensions over Iran also calmed markets, which were already on a downward course after U.S. data showed ample crude and gasoline supplies.
"The hope is that with the removal of the terror leader in Iraq, the Iraqi situation will stabilize faster and future oil supply could increase," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
A Jordanian-born militant, al-Zarqawi led a campaign of suicide bombings, kidnappings and other violence. Insurgents have also sabotaged pipelines numerous times.
Light sweet crude for July delivery on the New York Mercantile Exchange fell more than a dollar on the announcement in Baghdad that al-Zarqawi had been killed in an air raid. It was down 87 cents at $69.95 a barrel in electronic trading by afternoon in Europe.
July Brent crude futures on London's ICE Futures exchange fell 88 cents to $68.31 a barrel.
Thursday's slide in oil prices continued a two-day trend as the market adjusted to U.S. government data showing higher crude oil and gas inventories and some easing of tensions over Iran's nuclear program.
"If there are indications of a rapid diplomatic solution, prices could fall quite quickly to the mid-60s (per barrel)," Shum said. "But the general market feeling is that it will still take weeks to resolve the issue."
Iran has said it would study a package of incentives by world powers hoping to curb its nuclear program.
For Nigeria, Vienna's PVM Oil Associates noted that "following months of attacks and kidnappings some 611,000 barrels a day of Nigerian crude remains shut in." Still, tension there also ebbed Thursday, with militants in the oil-rich delta region saying they would release five kidnapped South Korean oil workers.
Despite the geopolitical jitters, the oil market remains well-supplied.
In its weekly report Wednesday, the Energy Department said U.S. crude-oil stocks grew last week by 1.1 million barrels to 346.6 million barrels, or 4 percent above year-ago levels. Gasoline inventories grew by 1 million barrels to 210.3 million barrels, or 2.5 percent below year-ago levels.
The commercial supply of distillates, which include heating oil and diesel, increased by 1.8 million barrels to 120.7 million barrels, or 8.5 percent more than a year ago.
On a week-to-week basis, the agency's report showed a slight decline in refinery output and gasoline demand. Over the past four weeks gasoline demand is 0.7 percent higher than it was during the same period a year ago.
Gasoline and heating oil futures both fell, by more than 3 cents to $2.0900 and by more than 2 cents to $1.9705 a gallon, respectively. Natural gas rose more than 8 cents to $6.055 per 1,000 cubic feet.
Associated Press writer Tanalee Smith in Singapore contributed to this report
Gettin Iraqi production back to pre-liberation levels would help as well: http://www.heritage.org/Research/MiddleEast/BG1693.cfm
Same here in SE TN. I keep reading that the price is also fluctuating because of shortages of ethanol needed for the summer driving blend in some areas. Diesel is still up around $2.80/gallon here and it does not have ethanol in it and the libs in the northeast should be long past needing heating oil. Something don't figure.....
Your prices are high because you are willing to pay them.
Many are "forced" to pay because they purchase vehicles that require a lot of gas, and live far from where they work.
So while consumer "choice" exists, it is very indirect, and hard to correct over the short term.
Some will argue that since they "need" gas, companies should be forced to sell it at a "fair" price, not at the highest price the consumer is willing to pay.
If I have a yard sale, and I have a bicycle I picked up from someone's trash and spent 2 bucks on new inner tubes, I might sell it for thirty bucks. The "regulatory pricing" people might argue that I should have to sell that bike to the first person who shows up with three bucks, that I have no right to sell it for such a HIGH price, to make such a "windfall profit".
But most would argue that since the bike is NOT "necessary" it's OK for me to sell for what the market will bear.
MY opinion is that whenever we try to define parts of the market as "necessary", and then try to use government to "control" the prices, we harm the economy and make things worse, not better, for consumers.
If the gas station down the street was forced to sell gas for a buck a gallon, they wouldn't have any gas for you when you showed up.
Uh-oh.
The lunatic in Iran better rattle his death threats before the speculators get carried away and lower the prices to where they should be.
You can sell 'short' ... sell what you don't own at what you think is a high price with a promise to buy that quantity at a later date (at hopefully a lower price). Short selling comes w/ unlimited downside risk ... if the price of what you shorted skyrockets, you have to 'cover' your short at the higher price.
The reason gas is high is because the government interferes in the free market, enviros keep the BS laws in place AND oil companies take advantage of it regardless of the spin that says they don't. Next time you want to lecture pick out a person who gives a sh** to listen to your theories and who doesn't already know how the free market is supposed to work.
If you look at my original comment the question I asked was "if we have all these supplies of oil and GAS, and heating elements why are the prices still high? The correct answer is "because the oil companies are sticking it to us" regardless of what people want to believe. They take advantage of the laws that exist now and government interference that exist now and gouge us, plain and simple. If we get the government out of the oil business, out of all business, we can go back to the way it was when I was young, cheap gas and gas companies competing against each other instead of acting in collusion.
This is still supply and demand. Supply and demand of fungible products as it relates to pricing is not consumption and production amounts. It is the price versus quantity consumers are willing to buy and suppliers are willing to sell at the current market conditions. Just like as I might pay more for batteries living on the Gulf Coast before hurricane season. I will pay more to cover a perceived future risk. If I decide the risk is less, I won't pay as much.
Do you wear your underwear on the outsidde like you do with your basic lack of knowledge in market economics?
IF you don't care, you might mention that when you ask questions. I'm sorry I answered your question, please forgive me.
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