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Oil prices fall for second day
Source: Agencies |
August 18, 2009, Tuesday
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OIL prices fell yesterday even as the year's first hurricane threatened to grow in size before it heads toward the U.S. coast.
Benchmark crude for September delivery fell 76 cents to settle at US$66.75 a barrel on the New York Mercantile Exchange. Prices have fallen more than 5 percent in two trading sessions.
Energy prices fell just about everywhere. Brent crude, in London, fell nearly 3 percent. Natural gas sank for the eighth straight day and hit a new low for the past 52 weeks.
The price for a barrel of oil could fall to between US$63 and US$59 per barrel, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. Ritterbusch believes the market is in the midst of a correction.
The appearance of hurricanes and tropical storms, which can damage oil and natural gas operations in the Gulf of Mexico, were outweighed by new reports showing that nervous consumers are holding on to their money.
Energy prices have been rising for months on the anticipation that consumers would power an economic recovery, but data to the contrary is starting to pile up.
Friday's big sell-off was triggered by a sharp drop in the Reuters/University of Michigan consumer sentiment index, a bad sign for crude and gasoline demand, which had already been sluggish this summer.
"Where did all the economic optimism go? Just a week ago we were celebrating the end of the recession and now we look like we are running for cover," said Phil Flynn, an oil analyst with PFGBest. "Banks have been failing like crazy yet the Colonial Bank failure late Friday afternoon, on top of sinking consumer confidence and retail sales, was a reminder that while the economy is on the mend we still have some significant problems ahead."
Consumers have been their own best allies at the pump, helping to drive down gasoline prices because they just aren't driving as much. You'd have to go back to 2005 to find gasoline prices this cheap in August.
The average price for a gallon of gas fell less than a penny overnight to US$2.641, according to auto club AAA, Wright Express and Oil Price Information Service.
The refiners that make gasoline have been slashing production because demand for it has fallen so severely, which has helped prop up prices somewhat. But gas is still a relative bargain. Last year at this time, gasoline cost more than US$3.75 a gallon on average.
In other Nymex trading, gasoline for September delivery rose 1.35 cents to settle at US$1.9515 a gallon and heating oil dropped 1.45 cents to settle at US$1.8265. Natural gas for September delivery fell 7.5 cents to settle at US$3.163 per 1,000 cubic feet.
Brent prices tumbled US$1.77 to settle at US$70.54 a barrel on the ICE Futures exchange.
Benchmark crude for September delivery fell 76 cents to settle at US$66.75 a barrel on the New York Mercantile Exchange. Prices have fallen more than 5 percent in two trading sessions.
Energy prices fell just about everywhere. Brent crude, in London, fell nearly 3 percent. Natural gas sank for the eighth straight day and hit a new low for the past 52 weeks.
The price for a barrel of oil could fall to between US$63 and US$59 per barrel, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. Ritterbusch believes the market is in the midst of a correction.
The appearance of hurricanes and tropical storms, which can damage oil and natural gas operations in the Gulf of Mexico, were outweighed by new reports showing that nervous consumers are holding on to their money.
Energy prices have been rising for months on the anticipation that consumers would power an economic recovery, but data to the contrary is starting to pile up.
Friday's big sell-off was triggered by a sharp drop in the Reuters/University of Michigan consumer sentiment index, a bad sign for crude and gasoline demand, which had already been sluggish this summer.
"Where did all the economic optimism go? Just a week ago we were celebrating the end of the recession and now we look like we are running for cover," said Phil Flynn, an oil analyst with PFGBest. "Banks have been failing like crazy yet the Colonial Bank failure late Friday afternoon, on top of sinking consumer confidence and retail sales, was a reminder that while the economy is on the mend we still have some significant problems ahead."
Consumers have been their own best allies at the pump, helping to drive down gasoline prices because they just aren't driving as much. You'd have to go back to 2005 to find gasoline prices this cheap in August.
The average price for a gallon of gas fell less than a penny overnight to US$2.641, according to auto club AAA, Wright Express and Oil Price Information Service.
The refiners that make gasoline have been slashing production because demand for it has fallen so severely, which has helped prop up prices somewhat. But gas is still a relative bargain. Last year at this time, gasoline cost more than US$3.75 a gallon on average.
In other Nymex trading, gasoline for September delivery rose 1.35 cents to settle at US$1.9515 a gallon and heating oil dropped 1.45 cents to settle at US$1.8265. Natural gas for September delivery fell 7.5 cents to settle at US$3.163 per 1,000 cubic feet.
Brent prices tumbled US$1.77 to settle at US$70.54 a barrel on the ICE Futures exchange.
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