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| Oil Prices Drop Sharply As Gas Plummets |
| 2005-04-07 |
| Oil futures prices fell more than $1 a barrel Thursday afternoon, following the lead of gasoline futures, and brokers said there appeared to be further momentum lower. "It's collapsing," said Ed Silliere, a broker at Energy Merchant Intermarket Futures in New York. "The market was extremely overbought." Light, sweet crude for May delivery dropped $1.45 to $54.40 a barrel in afternoon trade on the New York Mercantile Exchange. After an early decline of nearly 8 cents, gasoline futures recovered some lost ground and were down 4 cents to $1.62. On Wednesday the U.S. Energy Department said the supply of unleaded gasoline stood at 212.3 million barrels, or 5.5 percent higher than last year. However, gasoline demand remained healthy, up 2 percent from a year ago. Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said he expects high gasoline prices to persist as "people are accumulating inventories before the summer driving season." The government report also showed that the nation's inventory of crude oil was 317.1 million barrels, or 8 percent higher than last year. "U.S. oil demand is holding up well, and will help to support prices at lower levels," investment bank Barclays Capital said in a note. "There is ... nothing in the U.S. data to support another push up toward $60 yet." Emori said the current oil market remains "highly exaggerated," and that if prices followed market fundamentals, they should hover around the low $40 range. |
| Posted by:Steve |
| #11 The inventory build up is both - a drop in demand due to price (i.e. you dont drive as much when it cost you an arm and a leg), but the main factor is fear, which has driven the market since 2003. Fear of the IRaq warhosing things, fear of Iran messing htings, fear of russian instability, fear of Nigerian instability, fear of that looney in Venezuela hosing things up... etc. Been one thing after another driving market price spikes, and NONE of them has come to pass. For the fiscal element - look no further than the hedge funds, who have been leveraging the hell out of things, adn causing futures contracts to run irrationally. They screwed up the international system a few years back by shorting massively in the financial markets (they needed Greensapn to bail them out), and apparently have run amok again, this time in the oil sector. |
| Posted by: OldSpook 2005-04-07 5:23:17 PM |
| #10 The inventory build up is both - a drop in demand due to price (i.e. you dont drive as much when it cost you an arm and a leg), but the main factor is fear, which has driven the market since 2003. Fear of the IRaq warhosing things, fear of Iran messing htings, fear of russian instability, fear of Nigerian instability, fear of that looney in Venezuela hosing things up... etc. Been one thing after another driving market price spikes, and NONE of them has come to pass. For the fiscal element - look no further than the hedge funds, who have been leveraging the hell out of things, adn causing futures contracts to run irrationally. They screwed up the international system a few years back by shorting massively in the financial markets (they needed Greensapn to bail them out), and apparently have run amok again, this time in the oil sector. |
| Posted by: OldSpook 2005-04-07 5:23:17 PM |
| #9 What Andrea, hamster or gerbil powered turbines? |
| Posted by: Sobiesky 2005-04-07 8:36:49 PM |
| #8 Naturalized squirrels and home grown naked mole rats. |
| Posted by: Google Images 2005-04-07 8:22:11 PM |
| #7 Shell Game Alert... Anyone bet $3.00 average before years end? |
| Posted by: BigEd 2005-04-07 8:18:01 PM |
| #6 We need to seak an alternative to this ever so common problem--relying on other's for our gasoline. It makes my job in sales (out on the road) so difficult and costly. Can anyone think of a better alternative? Other than horse and carriage! Andrea |
| Posted by: Not so guliable 2005-04-07 7:27:52 PM |
| #5 Hedge funds game the system and screw up the "natural" order of market equilibrium. |
| Posted by: gromky 2005-04-07 7:24:24 PM |
| #4 A market equalizes supply and demand by changes in price. That is the sole and only purpose of a market. When someone says 'based on fundamentals the price should be x or y' they don't know what they are talking about. Markets make value. The correct price is the one set in the market. |
| Posted by: phil_b 2005-04-07 6:24:52 PM |
| #3 The inventory build up is both - a drop in demand due to price (i.e. you dont drive as much when it cost you an arm and a leg), but the main factor is fear, which has driven the market since 2003. Fear of the IRaq warhosing things, fear of Iran messing htings, fear of russian instability, fear of Nigerian instability, fear of that looney in Venezuela hosing things up... etc. Been one thing after another driving market price spikes, and NONE of them has come to pass. For the fiscal element - look no further than the hedge funds, who have been leveraging the hell out of things, adn causing futures contracts to run irrationally. They screwed up the international system a few years back by shorting massively in the financial markets (they needed Greensapn to bail them out), and apparently have run amok again, this time in the oil sector. |
| Posted by: OldSpook 2005-04-07 5:23:17 PM |
| #2 For whatever reason that the price of oil drops "sharply", the price of gas never does. But it's funny how most of the time, when oil prices rise, the price of gas rises almost as fast. |
| Posted by: Bomb-a-rama 2005-04-07 4:34:06 PM |
| #1 Hummm..... Mark E! what's the word, is the inventory build up due to fear or a softening in demand? |
| Posted by: Shipman 2005-04-07 3:52:34 PM |