Posted on 09/24/2006 9:41:41 PM PDT by NormsRevenge
bn SINGAPORE - Oil prices dropped below $60 a barrel in Asian trading on Monday, and analysts attributed the bailout to high inventories and receding fears about supply threats.
Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said hedge funds and investors were reacting to a soft market but noted that $60 is still a very strong price and said the market was still vulnerable to price spikes.
Light sweet crude for November delivery fell 60 cents to $59.95 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.
Oil prices have dropped 23 percent since the middle of July, as supply threats from Iran and Nigeria have diminished alongside fears about this year's Atlantic hurricane season. Signs of economic weakness in the U.S. also have helped push oil prices down.
"The hedge funds and investors have been bailing out because geopolitical tensions have eased and they also realize that inventories are high during this period of seasonally weak demand at the end of summer," Shum said.
"But as long as there is limited excess production capacity and limited refinery conversion capacity, the market will still be prone to periodic price spikes," he predicted.
The possibility of a production cut by OPEC prompted some buying last week among bargain hunters who believe oil is fairly priced at around $60 a barrel.
The Organization of Petroleum Exporting Countries recently reduced its demand forecast for the remainder of the year, and some cartel members have insinuated that oil prices below $60 could prompt talk of a production cut.
At its most recent meeting OPEC maintained its current output quota of 28 million barrels a day, and some analysts say it will be difficult to convince oil-producing nations to ease up on production at a time of record profit margins.
U.S. Energy Department data showed crude oil inventories declined by 2.8 million barrels last week to 324.9 million barrels — but that's still 5 percent more than last year and well above the five-year average for this time of year.
Inventories of distillate fuels such as diesel and heating oil grew by 4.1 million barrels last week to 148.7 million barrels, or more than 11 percent above year-ago levels.
A security officer looks through his binoculars from a rooftop of the OPEC headquarters in Vienna. OPEC called for the use of advanced technology that reduces carbon dioxide emissions to ensure a cleaner environment and the safe use of oil and natural gas to foster global development.(AFP/File/Joe Klamar)
I blame Bush.
Chavez's communist utopia about to implode.
I don't remember oil going below $60 after the '05 summer run up. It was like a floor as I recall it.
$58.60 Brent Spot per Bloomberg now.
Oil drops, get GOP reelected, then bomb the crap out of Iran.
59.88 -0.67 Nov NYM
Gas 4.508 -0.119
That's a fairly large move for Nat Gas.
Crude 62.01 +1.46
That's right, it's up. So is gasoline. The party's over.
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