Posted on 02/28/2007 6:20:51 AM PST by BenLurkin
SINGAPORE (AP) -- Oil prices fell Wednesday amid a plunge in many global stock markets and expectations for lower demand from China, the world's second-largest oil consumer. Still, continued tensions over Iran and expectations that the latest snapshot of U.S. inventories will reveal declines in refined products such as gasoline, diesel and heating oil, kept a fairly high floor under the market.
Light, sweet crude for April delivery dropped 45 cents to $61.01 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. A day earlier, the contract rose 7 cents to settle at a 2-month high of $61.46 a barrel.
The Brent crude contract for April delivery slipped 18 cents to $61.18 a barrel on the ICE Futures exchange in London.
Global stock markets tumbled Tuesday in the wake of a 9 percent drop in Chinese shares amid speculation that Beijing may take further steps to slow China's rapid growth -- which could weaken demand for oil.
"The reaction to the fall in the Chinese stock market is really a short-term overreaction," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The Chinese economy will remain a major growth engine in the global economy. Perhaps what's more important is the health of the U.S. economy."
On Wednesday, Chinese stocks bounced back nearly 4 percent, although most other Asian and European markets fell.
Still, oil prices aren't likely to drop much amid rising geopolitical tensions following Iran's failure last week to meet IAEA deadline to halt its nuclear program.
"The rhetoric has been increasing over the last week or two and the Iranian issue will remain with traders," Shum said. "Until there are indications of real supply disruptions or any military action, there will not be a major surge in prices. It will support pricing and prevent it from falling much too fast and provide a kind of balance to the Chinese stock market."
Iran's foreign minister, Manouchehr Mottaki, reiterated Tuesday that his country would never again suspend uranium enrichment -- a move the United States insists on for any negotiations with Tehran.
The U.S. Energy Information Administration will report later Wednesday on the nation's fuel inventories, which analysts expect to show declines in gasoline and distillate stockpiles.
Distillate inventories, which include heating oil and diesel fuel, are likely to fall by 2.6 million barrels, according to a Dow Jones Newswires survey of analysts. A winter storm that pounded the U.S. Midwest and Northeast earlier this week, dropping as much as two feet of snow in some areas, likely pushed up demand.
Gasoline stockpiles, meanwhile, are expected to decline by 1.6 million barrels, while crude oil inventories are expected to rise by 1.2 million barrels.
"Expectations of further product stockdraws in the U.S. ... as well as the geopolitical situation in the Middle East" continue to extend an upward push on prices, said Vienna's PVM Oil Associates.
Heating oil futures lost 1.53 cents to $1.7640 a gallon on the Nymex while April natural gas prices fell 13 cents to $7.403 per 1,000 cubic feet.
Associated Press writer Derrick Ho in Singapore contributed to this report.
English is a tough language to learn it appears.?
I'm just gonna budget for $3 gas this year.
This roller coaster ride is making me dizzy. LOL
That chart doesn't show a "fall!" Fresh cross, angle, and separation going with the trend show T. Boone Pickens is going to get his $80/bbl.
Huh? The prices at the pump are rising.
This guy must be using a time frame that started about mid-day Tuesday. "Contine to fall" my ass, it's maybe a dollar below the tippy tippy top within the past couple of days.
That said, it's clear from watching the intra-day action that the big shots want it above $60. Five days out of six when it was below $60, there was an intra-day rise of over a buck toward the end of the day.
And even if $60 is breached to the downside, $55 is probably inviolate, and below $50 is impossible. GWB couldn't get to the podium fast enough the day after it was a dime below $50 for about a millisecond to announce that it was now an important job of the USA to buy another 100,000 barrels of oil per day for the rest of time and just throw it away.
I'll be happy to be wrong of course.
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