Americans Showing Their Clout!
Oil hits 7-week low on demand worries, dollar gain
Jul 29, 4:10 PM (ET)
By STEVENSON JACOBS
|
NEW YORK (AP) - Oil prices tumbled more than $2 a barrel Tuesday,
finishing at their lowest level in seven weeks as a stronger dollar and
beliefs that record prices are eroding the world's thirst for energy
sparked another dramatic sell-off.
The drop - which surpassed $4 a barrel at one point during the day -
was a throwback to oil's nosedive over the past two weeks and
outweighed supply concerns touched off by a militant attack Monday on
two Nigerian crude pipelines. It was oil's seventh decline in the last
10 sessions.
Light, sweet crude for September delivery fell $2.54 to settle at
$122.19 on the New York Mercantile Exchange. It was the lowest
settlement price for a front-month contract since June 10. Earlier,
prices fell to $120.42, also the lowest level since June 10. Oil has
now fallen more than $25 from its trading high of $147.27, reached July
11.
More concerns that crude's run-up over the past year has pushed prices
to unsustainable levels fed Tuesday's decline. The U.S. Transportation
Department said Monday that U.S. drivers logged 9.6 billion fewer
vehicle miles in May - or 3.7 percent - compared to the same period
last year, the biggest drop ever for the historically busy summer
driving month.
And demand for oil in the U.S. - the world's thirstiest consumer -
continues to fall, dropping by 891,000 barrels per day in May compared
the same month a year ago, the Energy Department's Energy Information
Administration said Monday.
"We're seeing both statistical and anecdotal evidence of a very rapidly
weakening demand picture," said Jim Ritterbusch, president of energy
consultancy Ritterbusch and Associates in Galena, Ill.
The declines accelerated after oil briefly dipped below $122, a key
resistance level that triggered technical selling by computers
programmed to dump oil contracts once prices fall under a certain
threshold.
"Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.
Also weighing on prices was a sharply stronger dollar compared to the
euro, which made commodities less attractive to investors who have
bought oil futures as a hedge against inflation and weakness in the
U.S. currency.
|
"It looks like oil is selling off today with the very, very strong
dollar and nothing to drive it higher. Quiet seems to be bearish these
days," said Tom Kloza, publisher and chief oil analyst at Oil Price
Information Service in Wall, N.J.
In another sign that high prices are curbing Americans' consumption for
fuel, retail gas prices fell further below the $4-a-gallon mark. The
average price of a regular gas fell 1.7 cents to $3.941, according to
auto club AAA, the Oil Prices Information Service and Wright Express.
Monday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC (RDSB)
and was the latest in a two-year campaign of attacks on the country's
oil industry. Shell said a pipeline had been damaged in attacks and
that some crude production had been shut down to prevent the oil from
spilling into the environment.
The oil company said Tuesday it may not be able to fulfill some
oil-export contracts because of the damage. Shell didn't specify how
much oil production was cut by the attack or how long repairs would
take.
|
Movement for the Emancipation of the Niger Delta says it is acting to
force the Nigerian federal government to send more oil industry funds
to the southern region, which produces all of Nigeria's crude oil but
remains impoverished after decades of corrupt and wasteful governance.
Analysts at JBC Energy in Vienna, Austria, estimated the repeated
attacks on country's oil installations, Nigeria's output had fallen to
just below 1.9 million barrels a day from more than 2.4 million barrels
a day in 2005.
Oil market analysts are awaiting U.S. data later in the week for
indications of how the world's largest economy could be expected to
perform in coming months. Figures for gross domestic product for the
second quarter will be released Thursday, while July auto sales and the
July employment report are both due Friday.
In other Nymex trading, heating oil futures fell 8.98 cents to settle
at $3.4722 a gallon while gasoline prices fell 6.23 cents to settle at
$3.0077 a gallon. Natural gas futures rose 5.4 cents to settle at
$9.217 per 1,000 cubic feet after trading lower most of the day.
In London, September Brent crude lost $3.07 to $122.77 a barrel on the ICE Futures exchange.
posted by Joe at
5:56 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home