Related News
Oil prices settle below US$87 a barrel
Source: Agencies |
January 26, 2011, Wednesday
|
Online Edition
Online Edition
OIL continued to drop yesterday on mixed economic news and the possibility that Saudi Arabia and other OPEC countries will step up production.
Benchmark crude for March delivery lost US$1.68 to settle at US$86.19 a barrel on the New York Mercantile Exchange.
Oil hasn't been below US$87 since Dec.1. It has fallen more than 4 percent since Thursday, when it was approaching US$92 a barrel. About half of the drop happened in the last two days.
One of the main reasons for the decline this week is comments on Monday by the Saudi oil minister, which many analysts and investors took to mean that Saudi Arabia, the world's biggest oil producer, thought oil had gotten too expensive and could threaten global economic growth. He seemed to imply that the Saudis and other members of the Organization of Petroleum Exporting Countries could raise production to bring down the price of oil.
Goldman Sachs analysts think it's possible that OPEC has already stepped up production. They say global demand increased in December, but oil supplies did not appear to decline at the same pace.
"It would suggest that OPEC has started to bring its spare capacity back to the market earlier than we anticipated," Goldman Sachs wrote in a note to investors.
The Energy Department releases its weekly report on U.S. crude oil supplies on Wednesday. Analysts expect inventories to increase by 1.7 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
They also expect the report to show that refineries operated at a slower rate than the week before. "The reduced demand for crude oil that comes with refinery maintenance also has played a role in pulling prices back recently," energy consultants Cameron Hanover said.
Another reason for the drop in oil prices may be concern about the impact of energy prices on the economy. "Now that the economy seems to be on more solid footing, high food and oil prices are starting to loom as the greatest potential roadblocks to prosperity," Cameron Hanover said.
The economic news was mixed on yesterday. While the Conference Board's Consumer Confidence index hit an eight-month high, it was still far below levels that indicate a healthy consumer outlook. And the latest data on home prices shows them falling in eight major markets to the lowest level since the housing bubble burst in 2007.
The dollar strengthened. Since oil and other commodities are priced in dollars, a stronger dollar makes them less appealing to buyers with foreign currencies and tends to lower prices.
In other trading on the Nymex, heating oil gave up 2.65 cents to settle at US$2.5966 a gallon, gasoline futures lost 6.73 cents to settle at US$2.3706 a gallon and natural gas for March delivery fell 10.8 cents to settle at US$4.490 per 1,000 cubic feet.
In London, Brent crude dropped US$1.36 to settle at US$95.25 per barrel on the ICE Futures exchange.
Benchmark crude for March delivery lost US$1.68 to settle at US$86.19 a barrel on the New York Mercantile Exchange.
Oil hasn't been below US$87 since Dec.1. It has fallen more than 4 percent since Thursday, when it was approaching US$92 a barrel. About half of the drop happened in the last two days.
One of the main reasons for the decline this week is comments on Monday by the Saudi oil minister, which many analysts and investors took to mean that Saudi Arabia, the world's biggest oil producer, thought oil had gotten too expensive and could threaten global economic growth. He seemed to imply that the Saudis and other members of the Organization of Petroleum Exporting Countries could raise production to bring down the price of oil.
Goldman Sachs analysts think it's possible that OPEC has already stepped up production. They say global demand increased in December, but oil supplies did not appear to decline at the same pace.
"It would suggest that OPEC has started to bring its spare capacity back to the market earlier than we anticipated," Goldman Sachs wrote in a note to investors.
The Energy Department releases its weekly report on U.S. crude oil supplies on Wednesday. Analysts expect inventories to increase by 1.7 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
They also expect the report to show that refineries operated at a slower rate than the week before. "The reduced demand for crude oil that comes with refinery maintenance also has played a role in pulling prices back recently," energy consultants Cameron Hanover said.
Another reason for the drop in oil prices may be concern about the impact of energy prices on the economy. "Now that the economy seems to be on more solid footing, high food and oil prices are starting to loom as the greatest potential roadblocks to prosperity," Cameron Hanover said.
The economic news was mixed on yesterday. While the Conference Board's Consumer Confidence index hit an eight-month high, it was still far below levels that indicate a healthy consumer outlook. And the latest data on home prices shows them falling in eight major markets to the lowest level since the housing bubble burst in 2007.
The dollar strengthened. Since oil and other commodities are priced in dollars, a stronger dollar makes them less appealing to buyers with foreign currencies and tends to lower prices.
In other trading on the Nymex, heating oil gave up 2.65 cents to settle at US$2.5966 a gallon, gasoline futures lost 6.73 cents to settle at US$2.3706 a gallon and natural gas for March delivery fell 10.8 cents to settle at US$4.490 per 1,000 cubic feet.
In London, Brent crude dropped US$1.36 to settle at US$95.25 per barrel on the ICE Futures exchange.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
