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2008-10-21 23:55:41 UTC
Oil falls below $71 as dollar gains against euro
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Yahoo! Bookmarks Print By STEVENSON JACOBS, AP Business Writer
Stevenson Jacobs, Ap Business Writer – 2 hrs 10 mins ago AFP/File – A
service station attendant refuels a vehicle. World oil prices fell
sharply Tuesday, with investors …
Slideshow: Oil Industry Play Video Video: Nonprofits suffer in the
financial crisis AFP Related Quotes Symbol Price Change
DB 44.97 -1.31
^GSPC 955.05 -30.35
^IXIC 1,696.68 -73.35
Related PhotosFlickr Submit a Photo » NEW YORK – Oil prices
slumped back below $71 a barrel Tuesday as a stronger dollar
overshadowed expectations of a sizable OPEC output cut and led
investors to shed commodities bought as an inflation hedge.
At the pump, consumers got another price cut as a gallon of regular
gasoline lost 3.4 cents overnight to a new national average of $2.89,
according to auto club AAA, the Oil Price Information Service and
Wright Express. Prices have fallen 30 percent from their July 11 peak
of $4.11 a gallon and are quickly closing in on year-ago levels.
The dollar muscled higher against rival currencies as credit market
conditions eased some and on speculation that the U.S. government
might roll out another stimulus package in an effort to push the
economy out of a deep downturn.
Investors often buy commodities like crude oil as an inflation hedge
when the dollar weakens and sell those investments when the greenback
rises.
Light, sweet crude for November delivery fell $3.36 to settle at
$70.89 on the New York Mercantile Exchange. On Monday, the contract
rose $2.40 to settle at $74.25 a barrel.
Crude oil is down 52 percent from its all-time peak of $147.27 reached
July 11.
Alarmed by the rapid slide, the Organization of the Petroleum
Exporting Countries, which controls 40 percent of the world's oil
supply, is holding an extraordinary meeting Friday in Vienna. OPEC's
president, Chakib Khelil, said Sunday the group is planning to
announce an output reduction that analysts believe could total at
least 1 million barrels a day.
But experts are divided over how much impact on OPEC cut will have on
prices. Some believe waning global demand for energy will push prices
as low as $50 a barrel, while others say a significant supply
reduction could halt the downward the momentum.
"If OPEC does cut production, prices could return to the upside over
the next three to six months," said Costanza Jacazio, an oil analyst
with Barclays Capital in New York.
She said tighter global supplies could eventually push prices back
toward the $90 range, a level believed to be favored by several OPEC
members including Iran and Venezuela.
Oil-producing countries are facing steep serious budget shortfalls as
oil prices come down from record levels. Khelil has said OPEC may cut
output again at a meeting in December, and that the group considers
the oil market oversupplied by about 2 million barrels a day.
Investors are also keeping a close eye on whether non-OPEC producers,
such as Russia, will reduce supply as analysts lower price
expectations for next year. Deutsche Bank on Monday cut its 2009 oil
price forecast to $60 a barrel from $92 and predicted $57.50 for 2010.
"Producers are getting concerned about this downward spiral in pricing
since the summer," said Victor Shum, an energy analyst at consultancy
Purvin & Gertz in Singapore. "Some governments have based their
budgets higher than current prices."
Oil market traders are also closely watching economic conditions in
the U.S.
Federal Reserve Chairman Ben Bernanke told the House Budget Committee
on Monday that a fresh round of government measures might help ease
the country's downturn. There were also signs Tuesday of a reviving
credit market as bank-to-bank lending rates eased further.
In other Nymex trading, heating oil futures fell 3.24 cents to settle
at $2.1975 a gallon, while gasoline prices lost 2.82 cents to settle
at $1.6919 a gallon. Natural gas for December delivery rose 10.1 cents
to settle at $7.312 per 1,000 cubic feet.
In London, December Brent crude fell $2.31 to settle at $69.72 a
barrel on the ICE Futures exchange.
___
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex
Kennedy in Singapore contributed to this report.
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Adapted from Yahoo News
Buzz Up Send
Email IM Share
Digg Facebook Newsvine del.icio.us Reddit StumbleUpon Technorati
Yahoo! Bookmarks Print By STEVENSON JACOBS, AP Business Writer
Stevenson Jacobs, Ap Business Writer – 2 hrs 10 mins ago AFP/File – A
service station attendant refuels a vehicle. World oil prices fell
sharply Tuesday, with investors …
Slideshow: Oil Industry Play Video Video: Nonprofits suffer in the
financial crisis AFP Related Quotes Symbol Price Change
DB 44.97 -1.31
^GSPC 955.05 -30.35
^IXIC 1,696.68 -73.35
Related PhotosFlickr Submit a Photo » NEW YORK – Oil prices
slumped back below $71 a barrel Tuesday as a stronger dollar
overshadowed expectations of a sizable OPEC output cut and led
investors to shed commodities bought as an inflation hedge.
At the pump, consumers got another price cut as a gallon of regular
gasoline lost 3.4 cents overnight to a new national average of $2.89,
according to auto club AAA, the Oil Price Information Service and
Wright Express. Prices have fallen 30 percent from their July 11 peak
of $4.11 a gallon and are quickly closing in on year-ago levels.
The dollar muscled higher against rival currencies as credit market
conditions eased some and on speculation that the U.S. government
might roll out another stimulus package in an effort to push the
economy out of a deep downturn.
Investors often buy commodities like crude oil as an inflation hedge
when the dollar weakens and sell those investments when the greenback
rises.
Light, sweet crude for November delivery fell $3.36 to settle at
$70.89 on the New York Mercantile Exchange. On Monday, the contract
rose $2.40 to settle at $74.25 a barrel.
Crude oil is down 52 percent from its all-time peak of $147.27 reached
July 11.
Alarmed by the rapid slide, the Organization of the Petroleum
Exporting Countries, which controls 40 percent of the world's oil
supply, is holding an extraordinary meeting Friday in Vienna. OPEC's
president, Chakib Khelil, said Sunday the group is planning to
announce an output reduction that analysts believe could total at
least 1 million barrels a day.
But experts are divided over how much impact on OPEC cut will have on
prices. Some believe waning global demand for energy will push prices
as low as $50 a barrel, while others say a significant supply
reduction could halt the downward the momentum.
"If OPEC does cut production, prices could return to the upside over
the next three to six months," said Costanza Jacazio, an oil analyst
with Barclays Capital in New York.
She said tighter global supplies could eventually push prices back
toward the $90 range, a level believed to be favored by several OPEC
members including Iran and Venezuela.
Oil-producing countries are facing steep serious budget shortfalls as
oil prices come down from record levels. Khelil has said OPEC may cut
output again at a meeting in December, and that the group considers
the oil market oversupplied by about 2 million barrels a day.
Investors are also keeping a close eye on whether non-OPEC producers,
such as Russia, will reduce supply as analysts lower price
expectations for next year. Deutsche Bank on Monday cut its 2009 oil
price forecast to $60 a barrel from $92 and predicted $57.50 for 2010.
"Producers are getting concerned about this downward spiral in pricing
since the summer," said Victor Shum, an energy analyst at consultancy
Purvin & Gertz in Singapore. "Some governments have based their
budgets higher than current prices."
Oil market traders are also closely watching economic conditions in
the U.S.
Federal Reserve Chairman Ben Bernanke told the House Budget Committee
on Monday that a fresh round of government measures might help ease
the country's downturn. There were also signs Tuesday of a reviving
credit market as bank-to-bank lending rates eased further.
In other Nymex trading, heating oil futures fell 3.24 cents to settle
at $2.1975 a gallon, while gasoline prices lost 2.82 cents to settle
at $1.6919 a gallon. Natural gas for December delivery rose 10.1 cents
to settle at $7.312 per 1,000 cubic feet.
In London, December Brent crude fell $2.31 to settle at $69.72 a
barrel on the ICE Futures exchange.
___
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex
Kennedy in Singapore contributed to this report.
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Adapted from Yahoo News