Oil drops to 21-month low
11-11-2008, 09:20 AM
#1
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Joined APC: Feb 2005
Position: Dallas, Texas
Posts: 515
Oil drops to 21-month low
Oil price slides under $55
Nov 11 01:33 PM US/Eastern
Oil prices sank under 55 dollars a barrel on Tuesday to strike a 21-month low as frresh recession worries sparked fresh fears about slowing global energy demand, traders said.
On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December plunged 4.16 dollars to 54.92 dollars per barrel -- a level last seen on Janury 30, 2007.
At the same time, on the New York Mercantile Exchange (NYMEX), light sweet crude for December tumbled 4.09 dollars to 58.32 dollars, the lowest level since March 21, 2007.
"The short-term focus continues to be on weak demand," Barclays Capital analysts wrote in a research note to clients.
Oil prices extended earlier losses on Tuesday after Wall Street skidded lower in opening trade, with investor sentiment unsettled by fears about a collapse of General Motors and more poor corporate news amid the credit crisis.
The market was also undermined by the strengthening dollar which tends to dampen oil demand because dollar-priced crude becomes more expensive for buyers holding weaker currencies.
Nov 11 01:33 PM US/Eastern
Oil prices sank under 55 dollars a barrel on Tuesday to strike a 21-month low as frresh recession worries sparked fresh fears about slowing global energy demand, traders said.
On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December plunged 4.16 dollars to 54.92 dollars per barrel -- a level last seen on Janury 30, 2007.
At the same time, on the New York Mercantile Exchange (NYMEX), light sweet crude for December tumbled 4.09 dollars to 58.32 dollars, the lowest level since March 21, 2007.
"The short-term focus continues to be on weak demand," Barclays Capital analysts wrote in a research note to clients.
Oil prices extended earlier losses on Tuesday after Wall Street skidded lower in opening trade, with investor sentiment unsettled by fears about a collapse of General Motors and more poor corporate news amid the credit crisis.
The market was also undermined by the strengthening dollar which tends to dampen oil demand because dollar-priced crude becomes more expensive for buyers holding weaker currencies.
11-11-2008, 12:12 PM
#6
Gets Weekends Off
Joined APC: Jan 2008
Posts: 174
the price may have dropped by 2/3 but not demand. remember it was commodities traders and pension fund managers who drove it up.
i think demand was down 10 to 15 % from last at the end of summer.
also, everybody is flat arse broke including me.
i think demand was down 10 to 15 % from last at the end of summer.
also, everybody is flat arse broke including me.
11-11-2008, 12:55 PM
#7
Line Holder
Joined APC: Jul 2006
Position: CRJ Captain
Posts: 38
Originally Posted by yoke jerker
the price may have dropped by 2/3 but not demand. remember it was commodities traders and pension fund managers who drove it up.
i think demand was down 10 to 15 % from last at the end of summer.
also, everybody is flat arse broke including me.
i think demand was down 10 to 15 % from last at the end of summer.
also, everybody is flat arse broke including me.
11-11-2008, 01:10 PM
#8
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Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,224
Originally Posted by Riddler
I find it hard to believe that demand has shrunk by 2/3 in just a few months. The pendulum is just swinging the other way for now.
Once demand (or perceived demand) approaches or exceeds supply, then prices rise very rapidly...until enough buyers are simply priced out of the market so as to bring demand in line with supply. This will cause prices to far exceed production costs.
Once you back off from that point, and supply is greater than or equal to demand, then prices rapidly drop (due to competetive pressure) down to productions costs plus a little profit.
Of course OPEC is always fiddling with production...if they were in the US, they would be in prison for price fixing.
11-11-2008, 07:58 PM
#9
Doesn't Get Weekends Off
Joined APC: Jun 2007
Posts: 2,598
Originally Posted by Riddler
I find it hard to believe that demand has shrunk by 2/3 in just a few months. The pendulum is just swinging the other way for now.
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