Oil under $118

[Stuart Mackey]

Link to NZ Herald

Oil under US$118, tipped to keep falling
7:00AM Thursday August 07, 2008


Experts are tipping oil prices to fall as low as US$110 in the next few weeks as economic slowdowns in the US, Europe and China threaten demand.

Oil prices slipped below US$118 a barrel this morning - US$30 under their record high - after a jump in US crude and other fuel stockpiles fed beliefs that high energy prices are eating into demand.

Light, sweet crude for September delivery fell US$1.10 to US$118.07 a barrel in early afternoon trading on the New York Mercantile Exchange. Prices earlier fell as low as US$117.11, the lowest since May 2 and slightly more than US$30 below their trading high of US$147.27 reached July 11.

The fall came as the services industries in the US and Europe shrank for a second straight month in July. Tropical storm Edouard was also downgraded to a depression after it made landfall on the Texas coast easing fears about disruption of supply.

"There's concern about fading demand because of economic slowdowns in the US, Europe and now even China," said Tobias Merath, a commodity analyst at Credit Suisse Group in Singapore.


Merath forecast oil to fall to US$110 a barrel by the end of the third quarter.

Oil has now lost more than US$28 since touching a record of US$147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted US consumers to limit spending.

On August 3, the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 3.5 per cent, its biggest loss since March.

Oil has also fallen as its appeal as an inflation hedge has been curbed on gains by the US dollar against the euro and the yen. The US dollar traded near a seven-week high against the euro, and was near its highest versus the yen in more than a month.

"Monetary conditions are also fading away" reducing oil's appeal to investors, Merath said.

US petrol demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, a MasterCard report yesterday showed

Edouard's wind speeds remained below hurricane strength when it struck the Texas coast, and the storm was downgraded to a tropical depression, according to the National Hurricane Centre.

Hurricane forecasters from Colorado State University yesterday raised the number of Atlantic storms they expect this year to 17, including nine hurricanes, five of them major. The hurricane season, which runs through November 30, should be "much more active" than those between 1950 and 2000, the report said.

Opec boosted output by 0.7 per cent in July to 32.825 million barrels a day, a Bloomberg News survey showed. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.

"The Saudis are delivering what they promised after they said in June they would increase production," Merath said.

- BLOOMBERG, AP

[FireNexus]

Fantastic. Now more peak oil deniers can point at the trees while the forest is burning down.

[Admiral Valdemar]

It's holding steady now, and the dollar has been strengthening like crazy. If anything, this shows that the fundamentals are there and the price is warranted above $100. We shall see if the winter causes a spike again. Corrections like this were always to be expected, given higher volatility is a sign of the phenomenon.

[His Divine Shadow]

Oh fuck the dollar is strengthening? I hope that holds off for some months yet.

[Darth Wong]

A strengthening US dollar would be really helpful for the Canadian economy.

[Flagg]

A strengthening US dollar would be really helpful for the Canadian economy.

Yeah, wouldn't that mean less Canadians would be traveling to the US for low-low prices due to the beneficial exchange rate?

[Darth Wong]

A strengthening US dollar would be really helpful for the Canadian economy.

Yeah, wouldn't that mean less Canadians would be traveling to the US for low-low prices due to the beneficial exchange rate?

It would also mean that Canadian-manufactured goods will be cheaper in the US, hence they would sell better.

[Stargate Nerd]

Oh fuck the dollar is strengthening? I hope that holds off for some months yet.

I hope it holds off forever.

[Napoleon the Clown]

Before someone could intelligently argue that lowering oil prices suggest that peak oil is not as near as has been stated, the prices would have to stay relatively low for a significant amount of time. And demand would need to go back up, to boot. Right now, demand has dropped in the US considerably. My trip to California this year was an excellent demonstration of people responding to gas prices. The traffic I encountered while commuting between San Marcos and San Diego was much lighter than last year's trip. In fact, the traffic was what would be a bit on the heavy side for Salt Lake, but still wouldn't cause slow-down. Considering the enormous drop in traffic compared to the same time last year, that's a lot less gas and, by extension, a lot less oil.

I wonder how much this applies to other parts of the nation? Salt Lake doesn't seem to have adjusted too much, though the shitty mass-transit may have something to do with this.