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Wan LixinOpinion deputy editor of Shanghai Daily
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Oil rally stalls; Prices hover around US$68
Source: Agencies |
June 9, 2009, Tuesday
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Online Edition
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OIL prices fell yesterday as a four-month rally that has roughly doubled the price of crude lost some steam alongside the stock markets.
Benchmark crude for July delivery fell 35 cents to settle at US$68.09 a barrel on the New York Mercantile Exchange. Prices dropped as low as US$66.78.
Crude prices have risen in tandem with stocks as gloom about the global economy eases. Oil briefly broke the US$70 threshold Friday after the U.S. Labor Department reported that employers cut 345,000 jobs in May, the fewest since September.
Still, the unemployment rate hit 9.4 percent in May, a 25-year high and few people believe that there is enough demand to justify the soaring price of crude.
The growing sentiment is that the run-up in oil is a bubble ready to pop. Higher prices and momentum have become the justification for prices to move higher still, said analyst and trader Stephen Schork.
"The only trick is, will it pop at US$75, US$147 or US$200?" asked Schork in his daily report. "We don't know, but we do know it will pop."
That is not to say that prices for crude, and gasoline, will not rebound strongly in the future, a point reiterated by Royal Dutch Shell Chief Executive Jeroen van der Veer on yesterday. The Shell executive warned that the oil and gas industry will have trouble meeting demand once the global economy recovers, which could lead to the next price spike.
In other Nymex trading, gasoline for July delivery fell 1.85 cents to settle at US$1.936, while heating oil fell less than a penny to settle at US$1.7679. Natural gas for July delivery fell 13.7 cents to settle at US$3.731 per 1,000 cubic feet
In London, Brent prices fell 46 cents to settle at US$67.88 a barrel on the ICE Futures exchange.
Benchmark crude for July delivery fell 35 cents to settle at US$68.09 a barrel on the New York Mercantile Exchange. Prices dropped as low as US$66.78.
Crude prices have risen in tandem with stocks as gloom about the global economy eases. Oil briefly broke the US$70 threshold Friday after the U.S. Labor Department reported that employers cut 345,000 jobs in May, the fewest since September.
Still, the unemployment rate hit 9.4 percent in May, a 25-year high and few people believe that there is enough demand to justify the soaring price of crude.
The growing sentiment is that the run-up in oil is a bubble ready to pop. Higher prices and momentum have become the justification for prices to move higher still, said analyst and trader Stephen Schork.
"The only trick is, will it pop at US$75, US$147 or US$200?" asked Schork in his daily report. "We don't know, but we do know it will pop."
That is not to say that prices for crude, and gasoline, will not rebound strongly in the future, a point reiterated by Royal Dutch Shell Chief Executive Jeroen van der Veer on yesterday. The Shell executive warned that the oil and gas industry will have trouble meeting demand once the global economy recovers, which could lead to the next price spike.
In other Nymex trading, gasoline for July delivery fell 1.85 cents to settle at US$1.936, while heating oil fell less than a penny to settle at US$1.7679. Natural gas for July delivery fell 13.7 cents to settle at US$3.731 per 1,000 cubic feet
In London, Brent prices fell 46 cents to settle at US$67.88 a barrel on the ICE Futures exchange.
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