Related News
Oil settles near US$77 as stock market plummets
Source: Agencies |
May 7, 2010, Friday
|
Online Edition
Online Edition
OIL prices dropped to levels not seen since February yesterday, as the stock market plummeted.
Benchmark crude lost US$2.86 to settle at US$77.11 a barrel on the New York Mercantile Exchange. Oil hit US$73.71 on Feb. 16 and has lost almost US$10 a barrel since Monday.
Crude was lower at midday and the price slide picked up speed as the stock market tanked. Investors flew to safer havens in gold and bonds. The Dow Jones Industrial Average plunged almost 1,000 points, about 9 percent, before recovering some ground. The Dow was down 400 points half an hour before the close.
"We're talking a major move, the same kind of drops we saw when the credit crisis started to unravel a little bit. It is that type of same feeling in the marketplace," said Phil Flynn, analyst at PFGBest in Chicago.
Europe's debt problems got much of the blame for the drop in stocks and commodities. The ongoing crisis also has undermined the euro and strengthened the dollar. Commodities priced in dollars, like oil, become more expensive for investors holding euros as the dollar rises.
"The market had some false expectations about how safe things were or how easy the problem was going to be solved," said Flynn. "When they started to realize it wasn't, we're seeing the reverse of that trade."
Efforts continued to stop the oil spewing from a blown-out well at the bottom of the Gulf of Mexico. Crews planned to lower a 100-ton concrete-and-steel box a mile below the Gulf to cap the well.
It is hoped that the cap will collect as much as 85 percent of the oil gushing from broken wells after the Deepwater Horizon rig exploded April 20 and sank.
The oil slick from the well has so far not interfered with tankers delivering crude along the Gulf Coast.
Natural gas prices fell as supplies continued to grow. The Energy Information Administration said that natural gas inventories rose by 83 billion cubic feet to about 2 trillion cubic feet last week. That's almost 19 percent above the 5-year average. On the Nymex, natural gas lost 6.2 cents at settle at US$3.929 per 1,000 cubic feet.
"Once again the market has outpaced the calendar," MF Global wrote in a note to investors. "High summer brings not only the possibility of tropical activity but a surge in cooling demand. If the economy cooperates, a powerful rally might begin."
Gasoline futures continued to slide, however. In yesterday trading, gasoline fell 6.41 cents to settle at US$2.1563 per gallon after losing more than 10 cents on Wednesday and about 11 cents on Tuesday.
Energy consultancy Cameron Hanover said it has not seen a drop in gasoline prices like this since the last half of 2008. "Gasoline prices reached levels that were eating into the consumer's ability to pay rents or mortgages, and the higher price was acting as a massive tax on the economy. How prices act on the next rally will tell us more about how large a sell-off we may have coming."
In other Nymex trading in June contracts, heating oil fell 7.08 cents to settle at US$2.1137 a gallon.
In London, Brent crude gave up US$2.78 to settle at US$79.83 on the ICE futures exchange.
Benchmark crude lost US$2.86 to settle at US$77.11 a barrel on the New York Mercantile Exchange. Oil hit US$73.71 on Feb. 16 and has lost almost US$10 a barrel since Monday.
Crude was lower at midday and the price slide picked up speed as the stock market tanked. Investors flew to safer havens in gold and bonds. The Dow Jones Industrial Average plunged almost 1,000 points, about 9 percent, before recovering some ground. The Dow was down 400 points half an hour before the close.
"We're talking a major move, the same kind of drops we saw when the credit crisis started to unravel a little bit. It is that type of same feeling in the marketplace," said Phil Flynn, analyst at PFGBest in Chicago.
Europe's debt problems got much of the blame for the drop in stocks and commodities. The ongoing crisis also has undermined the euro and strengthened the dollar. Commodities priced in dollars, like oil, become more expensive for investors holding euros as the dollar rises.
"The market had some false expectations about how safe things were or how easy the problem was going to be solved," said Flynn. "When they started to realize it wasn't, we're seeing the reverse of that trade."
Efforts continued to stop the oil spewing from a blown-out well at the bottom of the Gulf of Mexico. Crews planned to lower a 100-ton concrete-and-steel box a mile below the Gulf to cap the well.
It is hoped that the cap will collect as much as 85 percent of the oil gushing from broken wells after the Deepwater Horizon rig exploded April 20 and sank.
The oil slick from the well has so far not interfered with tankers delivering crude along the Gulf Coast.
Natural gas prices fell as supplies continued to grow. The Energy Information Administration said that natural gas inventories rose by 83 billion cubic feet to about 2 trillion cubic feet last week. That's almost 19 percent above the 5-year average. On the Nymex, natural gas lost 6.2 cents at settle at US$3.929 per 1,000 cubic feet.
"Once again the market has outpaced the calendar," MF Global wrote in a note to investors. "High summer brings not only the possibility of tropical activity but a surge in cooling demand. If the economy cooperates, a powerful rally might begin."
Gasoline futures continued to slide, however. In yesterday trading, gasoline fell 6.41 cents to settle at US$2.1563 per gallon after losing more than 10 cents on Wednesday and about 11 cents on Tuesday.
Energy consultancy Cameron Hanover said it has not seen a drop in gasoline prices like this since the last half of 2008. "Gasoline prices reached levels that were eating into the consumer's ability to pay rents or mortgages, and the higher price was acting as a massive tax on the economy. How prices act on the next rally will tell us more about how large a sell-off we may have coming."
In other Nymex trading in June contracts, heating oil fell 7.08 cents to settle at US$2.1137 a gallon.
In London, Brent crude gave up US$2.78 to settle at US$79.83 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.
