Posted on 07/29/2008 9:03:52 AM PDT by Lucky9teen
LONDON (Reuters) - Oil fell more than $4 a barrel to below $121 on Tuesday, touching the lowest price since May, as signs of weakening demand outweighed a disruption to Nigerian oil output.
The drop also coincided with a firmer U.S. dollar, which may have reduced the appeal of commodities to some investors, and comments from OPEC's president that oil could fall to $70 or $80 in the long term.
"We still believe that crude's rallies are vulnerable and we would advise not buying into them," said Edward Meir, analyst at MF Global who earlier on Tuesday said he expected an "eventual retreat" to $121-$122.
U.S. crude was down $3.30 at $121.43 a barrel by 11:09 a.m. EDT and traded as low as $120.42, the lowest since May 6. Brent crude was off $3.56 at $122.28.
The president of OPEC, Chakib Khelil, on Tuesday called the current price "abnormal" and said he did not think the producer group should consider cutting output should prices continue to fall as markets were now balanced.
Khelil, who is also Algeria's oil minister, said oil could fall to $70 to $80 in the long term, if the U.S. dollar continued to strengthen and geopolitical concerns eased.
Oil has fallen from a record peak of $147.27 on July 11, pressured by signs that high prices and an economic slowdown are curbing demand especially in the United States, the world's largest oil consumer.
The chief executive of BP Plc Tony Hayward said on Tuesday he saw demand destruction of 5 to 10 percent for gasoline in developed OECD economies, as people drive less due to high fuel prices.
(Excerpt) Read more at reuters.com ...
The market knows that Queen Nancy and Dingy Harry(and their benefactors, the envirowhackos) are losing their grip on drilling in America.
So when does the 20% drop at the gas pump kick in?
I’ve reduced my fuel consumption SIGNIFICANTLY! See tagline. I’m now trying 55mph to see what mpg I get. Thank God I saw this coming and bought a 4-cyl. car......
hey nan and reid tell us how you made this happen?
Prices have already dropped about 10% from the peak in Dallas.
Funny enough my 2004 F150 will get 22.8 mpgs if I keep it at 60.And its the 5.4 motor!
“So when does the 20% drop at the gas pump kick in?”
It’s interesting how that works. When the price of crude goes up, the price at the pump goes up instantly.
When it goes down, first the station owner has to sell the higher priced gas that he already bought and is in his tank. Then the cheaper crude has to make it through the production system to the station owner. Takes weeks.
But, it’s just an opportunity for a station owner to catch a break, and most of those guys aren’t getting rich. As the product price comes down, competition will take care of the rest.
And all that started the slide was Bush’s rescinding of an Executive Order.
“And all that started the slide was Bush’s rescinding of an Executive Order.”
Anyone who isn’t a liberal could have seen that coming.
The “drug” dealers are trying to keep us addicted.
McCain and Bush and the GOP can drop it even more if they keep hammering away on the rats to DRILL DRILL DRILL
Yes, and the myth of “we cant drill our way out of this” is pretty much...a myth. The mere threat of drilling has somehow chilled the market and the petro-terrorist states
To what drug and which dealers are your referring?
A month ago, the meaningless Nigerian news would have sent crude up $4.
“So when does the 20% drop at the gas pump kick in?”
Not 20% but it is a start. Two fill ups ago I paid 2.39. Last night it was 2.15 at the same station. There is no doubt that it goes up faster than it goes down.
The rescinding of the executive order was a good start, but that’s not the whole story.
When housing prices were stratospheric, I kept telling my friends and family that our economy couldn’t support people earning $70-100k a year owning $500k homes. (Hello California!)
The same thing is true with gas prices. There are a lot of people earning <$10/hr out there. If you figure a $400/wk paycheck - which is closer to $300/wk after withholdings - how much can people really afford to pay for gas? Some people need to fill up twice a week to get to work (or more - luckily I don’t). Assume they are putting 12 gallons of gas in at a time. At $4/gallon, that’s $48 a fill-up. x2 makes it $96... almost a third of their paycheck. What does that leave for living expenses? $800-1000 a month? Good luck!
The simple fact is that high gas prices cannot be maintained. It was fun while it lasted, but I expect price per barrel to drop to the $80 range over the next couple of months. Even then, we’ll be stretched.
Without consumers who can afford your product, there is less demand.
Thank you comrade.
Your Hero medal is in the mail.
“To what drug and which dealers are your referring?”
The drug is oil, that’s why the quotes. The dealers are OPEC.
keep going...but that’s a huge drop from the peak.
I fail to see where the market has been flooded with new oil from OPEC.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.