Price Of Oil Drops Below $40 A Barrel
Oil prices fell below $40 a barrel Monday in Asia as investors looked to key U.S. corporate results this week for indications of the health of the world's largest economy and demand for crude.
Light, sweet crude for February delivery was down 98 cents to $39.85 a barrel by midafternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract on Friday fell 87 cents to settle at $40.83.
Steel producer Alcoa, chip maker Intel and biotech company Genentech are expected to report fourth quarter results this week, giving investors a gauge of how deep the current recession may be.
"Given that we're likely to see quite a few rather poor fourth quarter earnings reports, downward pressure will continue to be exerted on oil," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Worries about the macroeconomic outlook will continue to constrain oil."
Oil prices fell 17 percent last week, weighed down by fears that rising U.S. unemployment will undermine crude demand.
The Labor Department said Friday that employers slashed 524,000 jobs in December and 2.6 million jobs for all of 2008. The nation's unemployment rate jumped to 7.2 percent, the highest since 1993.
Crude prices have fallen despite a three-week conflict between Israel and Hamas in Gaza, a dispute between Russia and Ukraine that has shut off or disrupted natural gas supplies to more than a dozen European nations, and diminished crude exports from the Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply.
"We have these other factors that will support oil," Shum said. "Most likely, we won't see a big downward spiral despite the poor earnings reports."
Prices of futures contracts for later this year suggest investors expect oil to recover. The March contract trades near $46 a barrel while the April contract trades above $49.
"The expectation is that pricing will regain strength, and it's not a question of if but when," Shum said.
In a year's time, a commodity that was theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150, and then, in a period of just three months, crashed along with the stock market.
It's a complicated question, reported 60 Minutes correspondent Steve Kroft, and there are lots of theories. But many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia. See Kroft's report:
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. Light, sweet crude for February delivery was down 98 cents to $39.85 a barrel by midafternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract on Friday fell 87 cents to settle at $40.83.
Steel producer Alcoa, chip maker Intel and biotech company Genentech are expected to report fourth quarter results this week, giving investors a gauge of how deep the current recession may be.
"Given that we're likely to see quite a few rather poor fourth quarter earnings reports, downward pressure will continue to be exerted on oil," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Worries about the macroeconomic outlook will continue to constrain oil."
Oil prices fell 17 percent last week, weighed down by fears that rising U.S. unemployment will undermine crude demand.
The Labor Department said Friday that employers slashed 524,000 jobs in December and 2.6 million jobs for all of 2008. The nation's unemployment rate jumped to 7.2 percent, the highest since 1993.
Crude prices have fallen despite a three-week conflict between Israel and Hamas in Gaza, a dispute between Russia and Ukraine that has shut off or disrupted natural gas supplies to more than a dozen European nations, and diminished crude exports from the Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global supply.
"We have these other factors that will support oil," Shum said. "Most likely, we won't see a big downward spiral despite the poor earnings reports."
Prices of futures contracts for later this year suggest investors expect oil to recover. The March contract trades near $46 a barrel while the April contract trades above $49.
"The expectation is that pricing will regain strength, and it's not a question of if but when," Shum said.
In a year's time, a commodity that was theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150, and then, in a period of just three months, crashed along with the stock market.
It's a complicated question, reported 60 Minutes correspondent Steve Kroft, and there are lots of theories. But many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia. See Kroft's report:
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Last week crude was at 43.00$ and the price of regular in Austin was at 1.35 - 1.40 Today or this week crude is at 37.00 $ and gas is now at 1.65. could some one give me insight on this is it gred or greed. Frank
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Posted by mbourn2 at 03:24 PM : Jan 12, 2009
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You sound like Bush and you all know how popular he got with that statement...
The same Wall Street our taxpayer dollars are "bailing out"!!!!
The bankers and speculators on Wall Street have been getting rich off of us for decades, but its first now that people are starting to wake up and discover who REALLY runs this country; and its not Congress, the Supreme Court, or our fearless leader in the Oval Office.
Corporate America just keeps them around to make it all "legal"!!!
Instead of protesting in front of the White House, people should protest in front of Bank of America and the NY Stock Exchange!
SIG HEIL, I''VE GOT MY MONEY!!!, BUSH!!!
Posted by HawkSprings at 03:03 PM : Jan 12, 2009,
Probably. However, can you imagine how much fun we could have if we could orgainize random gas strikes where everyone calls in sick for a week. If we could organize that we could set it up so the investors in oil futures lose their @ss.
The only problem is that the feds would use taxpayer funds to bail them out.
We really need a Final Solution to the Wall Street problem. I think we still have some unused Sarin canisters laying around that would fit the bill. Tell ''em to hit the showers and then it''s shake, rattle and roll.
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Posted by mbourn2 at 03:24 PM
Well said. But let''s not forget the greedy speculators and their effect either. Laws are going to have to intervene to stop this free lunch ride the rich and greedy. And congratulations on making people mbourn upset. Good job!
They raped us with the 170 dollar per barrell scam, now they are crying? Cry yourselves straight to hell.
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Posted by Yngwie9184
If you don''t like their product hop on your bicycle and don''t buy any gas..... or buy a rig, hire a bunch of people to run it and start drilling. Otherwise, shut up.