Oil drops 6 percent to below $88 on demand concerns

Reuters on Yahoo ^ | 10/6/08 | Matthew Robinson

[NormsRevenge]

NEW YORK (Reuters) – Oil dropped more than 6 percent to below $88 a barrel on Monday as a global market rout churned concerns that faltering fuel demand could slow further.

U.S. stocks tumbled 6 percent to the lowest level in nearly five years as part of an international sell-off on fears the global economy was heading into recession.

U.S. crude settled down $6.07 at $87.81 a barrel after hitting an eight-month low of $87.56. London Brent crude fell $6.57 to settle at $83.68 a barrel.

Crude prices have plummeted from a peak over $147 a barrel set on July 11 as high fuel prices and the growing financial crisis slow oil demand in top consumer the United States and other industrialized nations.

"The prevailing macro sentiment is now crystallizing around the notion that we are heading into a synchronized global slowdown, a mirror image of the across-the-board expansion we saw from 2004 to early 2007," said Edward Meir of broker MF Global.

Analysts are watching oil demand from China -- which helped fuel a 6-year rally in commodities -- for signs the crisis is hitting consumption.

[Slapshot68]

What say you, T. Boone “Oil won’t go below $100 again” Pickens?

[Afronaut]

We will see this at the pumps in a few months...

[marshmallow]

Every cloud has a silver lining, I guess...... :-).

Now the speculators have gone down the crapper in the Wall St. mess, some sanity might return to the market.

Hooray!!

[sappy]

time for opec to cut production.......

[nascarnation]

nice to see gas under 3 bucks
hopefully a small benefit of the economic slowdown

hopefully propane (my home heating) tumbles too

[PhilosopherStones]

Oil below $90.

Dollar way up against Euro and Pound.

Russia halts stock exchange trading AGAIN.

It may be bad here, but it’s a lot worse over there.

Everything is relative. The US may be going down the drain, but everyone else will drown first.

[ikka]

Local Costco - $3.19 a gallon here in PA.

[kittymyrib]

Hedge funds are in deep doo-doo and they are selling the only commodity anyone will buy to cover their margins. All this supply/demand talk is an effort to cover up the fact that most of the rise in oil price was due to rampant speculation. Not even a massive hurricane’s damage to the oil platforms and refineries could pump up the market price.

[b4its2late]

time for opec to cut production.......

They have...OPEC's September Output Falls 334,000 B/D

[John123]

The US may be going down the drain, but everyone else will drown first.

That's pretty good! Mind if I use it for my tagline?

[misterrob]

Dollar getting much stronger relative to Euro. With europe in crises now we look strangely better.

The run up to $147 was a market bubble waiting to burst. If we can get gasoline back to under $2.50/gallon then that amounts to a stimulus of about $2,000 annual per house hold and a reduction in associated oil costs.

[Crazieman]

paid $2.89 for regular today

[marshmallow]

Crude prices have plummeted from a peak over $147 a barrel set on July 11 as high fuel prices and the growing financial crisis slow oil demand in top consumer the United States and other industrialized nations.

"......the growing financial crisis slow oil demand"?

Absolute bollocks!

There may well be a slow down in demand in the future as the recent events on Wall St, filter down, but that most certainly is not the reason for the drop from $147/barrel in July to below $90, now. In percentage terms, that is a huge drop.

It's because the speculators have taken a bath.

[Mr. K]

so when it reaches $70 gas will go down in half to $2 per gallon too... right?? RIGHT???

[Steely Tom]

Oil up: bad news. George Bush's fault. Global warming. We're all gonna die.

Oil down: bad news. George Bush's fault. Economy tanking. We're all gonna die.

[ari-freedom]

same with the $. a lot of deleveraging going on.

[avid]

Oil falls because the traders expect the economy to have problems. Nothing to chear about.

[texas_mrs]

Interesting, becaue back in March, Glenn Beck said this:

" I told you yesterday I'm going to make not a prediction, I'm going to make a promise. I said where are all of the conservatives, saying that we can't give socialism, we can't give a socialized program to bail these big companies out. Where are they? I said here is my promise, not a prediction. Since nobody on the conservative side is standing up saying, hey, we can't bail these companies out, there will be no defense against the argument, "Well, you were for it for the big companies."

And I said, I'll make you a promise that's what's coming. Well, in today's USA Today, which means Harry Reid said this sometime yesterday, as maybe I was making this promise on the air. Senate majority leader Harry Reid promised consideration of a second stimulus package. The first one's not even out yet and it's not even going to -- it's not going to work. But anyway, he's promising a second one. Extending unemployment benefits, funding construction, providing other kinds of aid. He criticized the White House on Monday for being willing to bail out large investment banks while doing little for homeowners facing foreclosure. Fastest prediction to come true, Stu?

"Here's the thing I want you to watch for. I want you to watch for a sudden fall in the price of oil. If you see oil spike downward to about $70 a barrel, $80 a barrel, if it goes from $110 to $80 a barrel, look out. It's counterintuitive but you have to remember that the price of oil is based on futures and so what could possibly happen, a bad sign. If it drifts back down slowly over a period of time, that's good. But if it suddenly drops down, what that means is that the conventional wisdom for the people who buy oil futures, these are the big -- you know, there's a lot of money. These people who are buying oil futures, what they're saying is the economy around the world is going to slow down so much that people won't be able to drive or fly as much as they have had to. They won't be able to afford the oil or the gasoline or the diesel. So demand will go way, way down for oil. That's what they will be betting on. Right now they're betting on things are just going to continue to grow and consumption's going to continue to grow and the price -- and the dollar is going to continue to fall. If oil suddenly spikes down, watch out."

The whole article at:


http://www.glennbeck.com/content/articles/article/198/7423/

[PhilosopherStones]

Feel free!