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Oil's 3-day tumble nears $16
 NEW YORK (CNNMoney.com) -- Oil prices fell steeply on Thursday, extending a decline to a three-day record $15.89 a barrel, as natural gas prices tumbled and investors anticipated declining demand. Light, sweet crude for August delivery fell $5.31 to settle at $129.29 a barrel on the New York Mercantile Exchange. The last time oil settled below $130 was June 5, when it settled at $127.79.The decrease may mean that the market has finally realized that the fundamentals cannot sustain such large prices, said Peter Beutel, an oil analyst with Cameron Hanover. "I think the days of seeing record prices every other day for 60 days running are behind us," Beutel said. "But that doesn't mean we won't see a few more highs." Beutel said that uncertainty over the economy, the Middle East and hurricane season mean oil prices will remain volatile in the short run. A sharp drop in natural gas prices scared many investors out of the energy market, said Tom Orr, head of research at Weeden & Co. The August natural gas contract fell 86 cents, or 7.5%, to $10.54 per thousand cubic feet after the government's weekly inventory report showed an unexpected increase in supply. "When gas cracked, [oil] really just fell off a cliff," said Orr. A report from U.K. newspaper The Guardian eased concerns about a disruption in supplies from Iran, the second-largest producing member of the Organization of Petroleum Exporting Countries. The paper said Thursday that the U.S. may announce a diplomatic interest section in Tehran in less than a month. Crude fell $4.14 Wednesday to settle at $134.60 a barrel, following a huge $6.44 selloff the previous day - crude's biggest one-day dollar drop since the Gulf War in 1991. Earlier in the week, Fed Chairman Ben Bernanke told Congress that high fuel prices and a slowing economy may be cutting into the U.S. appetite for crude. His statements were later backed up by the Energy Department, which reported Wednesday that U.S. crude stocks had unexpectedly risen by 3 million barrels - analysts polled by Platts had expected a drawdown. "There is a continued fear that demand is going to drop," Beutel said. "The economy is definitely on a rocky road right now. There is concern about inflation and the declining purchasing power of the dollar." Posted by: Steve White 2008-07-18 |
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