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Oil settles 2 percent lower after wild swings
Source: Agencies |
May 21, 2010, Friday
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OIL prices resumed their May swoon yesterday as concerns over the European economy had traders bailing out of energy commodities.
The session was a volatile one. An early 2 percent gain had turned into an 8 percent decline by early afternoon on the New York Mercantile Exchange. Prices settled about 2 percent lower, the 12th decline in 14 trading days this month.
"Fear has obviously gripped the market, and we're trading accordingly," analyst and trader Stephen Schork said.
This was the final trading day for the June contract. Benchmark crude for June delivery lost US$1.86 to settle at US$68.01 a barrel on the Nymex. Prices tumbled as low as US$64.24 earlier in the day, the lowest price for oil since July. Oil has shed nearly 22 percent of its value since hitting US$86.84 on April 6.
Most of the trading has moved to the July contract, which lost US$1.68 to settle at US$70.80 a barrel.
The steep drop in oil prices should give Memorial Day weekend travelers a gift at the gas pump. Gasoline prices were down yesterday for the 14th day in a row, and they'll be pushed even lower by oil's continuing tumble.
Futures contracts for most energy commodities slumped as financial troubles in Europe and weak jobs numbers in the U.S. sparked a sell-off on Wall Street. The Dow Jones Industrial Average was down about 260 points, or 2.5 percent, less than an hour before the close. The NASDAQ and the S&P 500 were off by about as much.
Prices for heating oil, gasoline and Brent crude all dropped by at least 2 percent.
"People are saying it's time to get out," said Michael Lynch, president of Strategic Energy & Economic Research. Earlier this year, Lynch stood out from many of his peers by predicting that oil prices would fall.
"The market has gotten way ahead of itself," Lynch said. "People kept saying that soon demand will go up and inventories will go down. But that's not happening."
Investors had been shrugging off U.S. government data showing that Americans have a relatively weak appetite for fuel. Now, they're nervous about the debt crisis in Europe and the glut of fuel in U.S. storage tanks.
That has Lynch predicting that if the world doesn't start sopping up excess supplies, oil prices may fall into the US$40-per-barrel range this year.
Natural gas supplies remain abundant as well. An EIA report on yesterday showed that the country's stockpile of natural gas has ballooned to nearly 17 percent more than the five-year average. It declined less than oil, dropping 5.2 cents to settle at US$4.106 per 1,000 cubic feet.
At the pump, retail gasoline prices dropped 1.2 cents overnight to a new national average of US$2.84 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 1.9 cents cheaper than it was a month ago, but it's 50.6 cents more expensive than a year ago.
Experts say gas prices have likely peaked already this year, and it should cost less to fill up this summer than in the summer of 2009. That's good news for the travel industry as Americans get ready to hit the highways over the Memorial Day weekend, the unofficial start of the summer driving season.
AAA estimated yesterday that more people will take leisure trips during the holiday weekend than last year. About 32.1 million people are expected to head for the highway or the airport. The travel club's report said most people probably will watch their wallets more closely, however, spending about US$809 during the weekend this year compared with over US$1,000 last year.
In other Nymex trading in June contracts, heating oil fell 4.33 cents to settle at US$1.9019 a gallon, and gasoline lost 5.07 cents to settle at US$1.9645 a gallon.
In London, Brent crude July contact gave up US$1.85 to settle at US$71.84 a barrel on the ICE futures exchange.
The session was a volatile one. An early 2 percent gain had turned into an 8 percent decline by early afternoon on the New York Mercantile Exchange. Prices settled about 2 percent lower, the 12th decline in 14 trading days this month.
"Fear has obviously gripped the market, and we're trading accordingly," analyst and trader Stephen Schork said.
This was the final trading day for the June contract. Benchmark crude for June delivery lost US$1.86 to settle at US$68.01 a barrel on the Nymex. Prices tumbled as low as US$64.24 earlier in the day, the lowest price for oil since July. Oil has shed nearly 22 percent of its value since hitting US$86.84 on April 6.
Most of the trading has moved to the July contract, which lost US$1.68 to settle at US$70.80 a barrel.
The steep drop in oil prices should give Memorial Day weekend travelers a gift at the gas pump. Gasoline prices were down yesterday for the 14th day in a row, and they'll be pushed even lower by oil's continuing tumble.
Futures contracts for most energy commodities slumped as financial troubles in Europe and weak jobs numbers in the U.S. sparked a sell-off on Wall Street. The Dow Jones Industrial Average was down about 260 points, or 2.5 percent, less than an hour before the close. The NASDAQ and the S&P 500 were off by about as much.
Prices for heating oil, gasoline and Brent crude all dropped by at least 2 percent.
"People are saying it's time to get out," said Michael Lynch, president of Strategic Energy & Economic Research. Earlier this year, Lynch stood out from many of his peers by predicting that oil prices would fall.
"The market has gotten way ahead of itself," Lynch said. "People kept saying that soon demand will go up and inventories will go down. But that's not happening."
Investors had been shrugging off U.S. government data showing that Americans have a relatively weak appetite for fuel. Now, they're nervous about the debt crisis in Europe and the glut of fuel in U.S. storage tanks.
That has Lynch predicting that if the world doesn't start sopping up excess supplies, oil prices may fall into the US$40-per-barrel range this year.
Natural gas supplies remain abundant as well. An EIA report on yesterday showed that the country's stockpile of natural gas has ballooned to nearly 17 percent more than the five-year average. It declined less than oil, dropping 5.2 cents to settle at US$4.106 per 1,000 cubic feet.
At the pump, retail gasoline prices dropped 1.2 cents overnight to a new national average of US$2.84 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 1.9 cents cheaper than it was a month ago, but it's 50.6 cents more expensive than a year ago.
Experts say gas prices have likely peaked already this year, and it should cost less to fill up this summer than in the summer of 2009. That's good news for the travel industry as Americans get ready to hit the highways over the Memorial Day weekend, the unofficial start of the summer driving season.
AAA estimated yesterday that more people will take leisure trips during the holiday weekend than last year. About 32.1 million people are expected to head for the highway or the airport. The travel club's report said most people probably will watch their wallets more closely, however, spending about US$809 during the weekend this year compared with over US$1,000 last year.
In other Nymex trading in June contracts, heating oil fell 4.33 cents to settle at US$1.9019 a gallon, and gasoline lost 5.07 cents to settle at US$1.9645 a gallon.
In London, Brent crude July contact gave up US$1.85 to settle at US$71.84 a barrel on the ICE futures exchange.
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