Posted on 02/19/2008 10:59:44 PM PST by TigerLikesRooster
Oil Retreats After Closing Above $100
Wednesday February 20, 1:55 am ET By Thomas Hogue, AP Business Writer
Oil Prices Retreat After Closing Above $100 a Barrel; Asian Stock Markets Rattled
BANGKOK, Thailand (AP) -- Oil prices retreated Wednesday in Asia after closing above $100 a barrel for the first time overnight as investors seized on a refinery explosion and the possibility that OPEC may cut its output.
The spike in crude prices Tuesday rattled Asian financial markets, with Tokyo's benchmark stock index falling more than 3 percent.
Other factors lifting oil above the $100 mark were concerns about a falling dollar, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela.
Many recent forecasts have said oil demand growth this year will be less than initially expected -- yet prices continue to rise. That suggests oil may continue rising as the weakening dollar attracts new investors to the futures market. Crude futures offer a hedge against a falling dollar.
Traders are worried that global oil supplies will be able to meet growing demand.
"The oil price continues to be supported by concerns over oil supply," said David Moore, Commonwealth Bank commodity strategist, in a daily research note. "There is speculation that OPEC will either leave oil production levels unchanged, or, possibly, even reduce production following the 5 March OPEC meeting."
Light, sweet crude for March delivery fell 71 cents to $99.30 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.
The contract rose $4.51 on Tuesday to settle at a record finish of $100.01 a barrel, after earlier rising to a trading record of $100.10 a barrel. It was the first time since Jan. 3 that oil had been above $100.
Prices are still within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
The rise spooked global equity markets amid worries that high oil prices will further crimp consumer demand, one of the primary drivers of the U.S. economy. In addition to declines in Tokyo, Hong Kong's Hang Seng stock index was down more than 2 percent in afternoon trading. On Tuesday, the Dow Jones industrial average closed 0.1 percent lower, erasing early gains.
Gasoline and heating oil prices appeared to lead Tuesday's wide advance in energy prices due to the explosion Monday at Alon USA's Big Spring, Texas, refinery. The 67,000-barrel-a-day facility could be shuttered for two months, the company has said.
During Tuesday's Nymex floor session, March gasoline jumped 10.93 cents to settle at a record $2.6031 a gallon, and March heating oil rose 11.45 cents to settle at $2.7614 a gallon, also a record. Like crude, both retreated in after-hours trading.
A threat by a rebel group in Nigeria to escalate attacks on the nation's crude oil infrastructure helped boost oil prices overnight. The rebels were acting in response to rumors that the government had killed a captured leader, whom authorities later said was safe and well. Militant attacks have cut about 20 percent of Nigeria's crude output in recent years.
Traders are also focused on the Organization of Petroleum Exporting Countries, which will meet early next month to map out production plans, and Venezuela, where President Hugo Chavez made conflicting statements this weekend about the country's legal dispute with Exxon Mobil Corp.
The world's largest oil company is fighting Venezuela's nationalization of an oil project, and recently convinced several courts to freeze $12 billion in Venezuelan oil assets.
In London, April Brent crude fell 75 cents to $97.81 a barrel on the ICE Futures exchange.
Heating oil futures fell 1.94 cents from their Tuesday record to $2.74220 a gallon. Gasoline prices also dropped 1.94 cents, to $2.5837 a gallon. Natural gas futures gained 6.7 cents to $9.044 per 1,000 cubic feet.
Ping!
More like the speculators drove up the price.
You beat me to the punch by FOUR minutes!
Anyway, it is obvious that the drop of a pin will send oil prices into the stratosphere... perhaps the coming lunar eclipse will drive them into orbit :p
Good heavens, we have a Mt. Everest of it that we are refusing to mine, thanks to Bill Clinton.
If only we would have had six years of the GOP controlling the White House and House & Senate we could have revoked those coal mining restrictions put in place by Clinton!
1998, Brea Oil Field, the oldest producing field in California. I am talking to my neighbor who runs the field. 90 percent of the wells are shut down. He tells me 2/3 of the fields oil is still in the ground. Oil is about $20/barrel. I ask him what price would it take to work over the field and crank up production. His reply? "$28."
The U.S.A. has thousands of plugged wells that could be worked over at $80+/bbl. If it is profitable to get oil from tar sands, there is plenty of domestic petroleum around.
yitbos
Yes, almost every productive well ever drilled still has oil and are worked over every so often. I have worked on wells that were originally put into production in the 1940’s and have ceased production and worked over four times.
Throughout Texas and in S. Louisiana there are such wells many have been brought into production and other remain capped with no government restriction on bringing them back into production. The only thing that keeps them capped is the cost of bringing them back on line.
However, these wells in total are not going to eliminate the need for foreign oil, especially when it is still cheaper to import from Mexico, Canada, Venezuela or the Middle East.
I've seen some frequent heavy duty advertisements from Fla and Las Vegas giving away free accommodations for people to come and visit and sit through time share shell game hard sell promos.
It's just a matter of time before oil comes down to sensible levels.
We are cancelling a trip to Washington DC to see the Pope. We can’t afford to put gas in Dad’s Ram 1500 and pull the camper.
We’ll be doing Cedar Point instead.
The 'environmental conditions', and 'animal protection' was losing it's luster, especially with all the lengths the companies have gone to alleviate those fears. Now with the GW religion, they have something to wave around and keep us from saving ourselves from being dependent on foreign sources.
I'm sure you'll have the Pope's, actually God's, blessings regardless.
Most commodities are down some today. Oil being one of them. The runup yesterday as usual overshot the mark.
A 4% runup in price when there are growing inventories around the world and declining economies seems a little suspect.
I would not be surprised if the group responsible was also shorting stocks at the same time as bidding up the price of oil.
NYMEX crude 101.02 up a dollar. Could reach 105 soon.
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