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Oil slumps for ninth straight day
Source: Agencies |
December 15, 2009, Tuesday
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OIL prices fell for the ninth straight day yesterday, dipping below US$68 per barrel on persistent concerns about high inventories and weak demand.
Benchmark crude for January delivery fell 36 cents to settle at US$69.51 on the New York Mercantile Exchange after falling as low as US$68.59 earlier in the trading session.
The supply of crude has been back into the spotlight one week before the Organization of Petroleum Exporting Countries meets in Angola to talk about production.
A number of member states have strayed from lower production quotas that OPEC put into place to help shore up collapsing oil prices earlier this year, analysts say.
"Sure it is easy to comply with your production targets when there are no buyers for your oil but not so much when you can actually find some buyers," said PFGBest analyst Phil Flynn.
Crude supplies in the U.S. have risen six out of the past 10 weeks because the refiners that convert it into crude have been cutting back on production.
There are also reports of a growing amount of oil stored at sea in tankers. Some exporting countries and even large investors choose to keep some oil off the markets until prices improve.
That can depress prices, if investors think a lot of oil held off the market could be delivered soon.
Yet oil prices have remained stubbornly high, most energy experts say, because those who are still buying it are doing so based on the value of the dollar, rather than actual demand.
Because crude is priced in the U.S. currency, investors holding stronger currencies can effectively buy more oil for less money.
But demand for fuel in the U.S. has barely nudged from last year, when there were fears of a full-blown depression.
Many of those dollar based-trades began to fade at the beginning of December, just when the dollar began to rebound.
In other Nymex trading in January contracts, heating oil rose less than a cent to US$1.9161 while gasoline fell 1.49 cents to settle at US$1.8267. Natural gas rose 8.6 cents to US$5.249 per 1,000 cubic feet.
In London, Brent crude for January delivery gained a penny to settle at US$71.89 on the ICE Futures exchange.
Benchmark crude for January delivery fell 36 cents to settle at US$69.51 on the New York Mercantile Exchange after falling as low as US$68.59 earlier in the trading session.
The supply of crude has been back into the spotlight one week before the Organization of Petroleum Exporting Countries meets in Angola to talk about production.
A number of member states have strayed from lower production quotas that OPEC put into place to help shore up collapsing oil prices earlier this year, analysts say.
"Sure it is easy to comply with your production targets when there are no buyers for your oil but not so much when you can actually find some buyers," said PFGBest analyst Phil Flynn.
Crude supplies in the U.S. have risen six out of the past 10 weeks because the refiners that convert it into crude have been cutting back on production.
There are also reports of a growing amount of oil stored at sea in tankers. Some exporting countries and even large investors choose to keep some oil off the markets until prices improve.
That can depress prices, if investors think a lot of oil held off the market could be delivered soon.
Yet oil prices have remained stubbornly high, most energy experts say, because those who are still buying it are doing so based on the value of the dollar, rather than actual demand.
Because crude is priced in the U.S. currency, investors holding stronger currencies can effectively buy more oil for less money.
But demand for fuel in the U.S. has barely nudged from last year, when there were fears of a full-blown depression.
Many of those dollar based-trades began to fade at the beginning of December, just when the dollar began to rebound.
In other Nymex trading in January contracts, heating oil rose less than a cent to US$1.9161 while gasoline fell 1.49 cents to settle at US$1.8267. Natural gas rose 8.6 cents to US$5.249 per 1,000 cubic feet.
In London, Brent crude for January delivery gained a penny to settle at US$71.89 on the ICE Futures exchange.
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