Crude oil drops to $90, may fall further

Energy prices moved too far, too fast in January and early February, one expert says. And more cuts be ahead as Europe's economic woes weigh on oil markets.

By Charley Blaine Mar 4, 2013 5:05PM
Oil Well Pumpjack © Roger Milley, Vetta, Getty ImagesFor much of Monday, crude oil (-CL) in New York traded below $90 a barrel -- and just missed its first close under $90 since Dec. 24.

While crude settled at $90.12, down 56 cents on the day, it may be headed lower still -- perhaps reaching $85 to $86 a barrel.

This is not an idle noting of price. Gasoline prices have started to come down as well. According to AAA's Daily Fuel Gauge Report, the national average price for regular unleaded gas was $3.746 a gallon on Monday, down from a peak of $3.786 a gallon just this past Thursday.

The average has fallen now for five straight days; the increase for the year has dropped from 17.6% to 16.4%.

Several factors are pushing oil prices lower, says Stephen Schork, editor of The Schork Report, which tracks energy and shipping markets.

Prices moved too far, too fast. Crude in New York jumped to as high as $98.66 a barrel on Jan. 30, a jump of 7.45% from Dec. 31 and 27% from its 2012 low of $77.69 on June 28. The increase was "beyond the buying capacity of consumers," Schork added.
Gasoline prices followed just as quickly, rising as much as 17.6% before starting to fall last week.

U.S. retail gasoline prices are heavily influenced  by the price of Brent Crude, the benchmark North Sea oil. Brent, in turn, is influenced by the health of European economy.

Europe is headed toward a second year of recession, with Eurozone unemployment at 11.9% and gasoline demand falling. Brent settled at $110.09 a barrel on Monday afternoon, down 31 cents on the day. It's down 7% from a recent peak at $118.29 on Feb. 14. European gasoline prices were around $8 a gallon at the same time, and drivers have cut back, Schork said.

Lastly, the economic malaise in Europe -- complicated by likelihood of another Italian election soon -- has pushed the euro lower against the dollar. That also has pushed oil prices lower.

Schork believes crude in New York will fall further, probably hitting a near-term low in the mid-$80 range for now. The seasonal falls that typically pull oil lower may still come.

Absent a headlines-making shock, like increasing Middle Eastern tensions, he thinks it's possible crude in New York and even Brent have hit a 2013 peak.

The prospect of lower energy prices, meanwhile, kept energy stocks at bay. The sector has been the weakest of the 10 sectors of the Standard & Poor's 500 Index ($INX).  Exxon Mobil (XOM) was down 48 cents to $88.75. ConocoPhillips was down 66 cents to $57.62.

Chevron (CVX), however, gained 59 cents to $117.49. Hess (HES) was up $2.30 to $68.84 after announcing it will divest its refining, marketing and trading businesses.

The S&P 500 finished up 7 points, to 1,525. It is 40 points under 1,565.15, its peak close, set on Oct. 9. 2007. The Dow Jones industrial Average ($INDU) fell as many as 59 points in the morning but closed up 38 points to 14,128, its second-highest close ever.

The Nasdaq Composite Index ($COMPX) was up 12 points to 3,182.
Tags: oil
100Comments
Mar 4, 2013 10:40PM
avatar
The new US secretary of State runs over to the Egyptians and tells the Muslim Brotherhood we'll give them 450 million out of a promised 1.5 billion now if they'll make their economy better.
Meanwhile we get to cut our own aid to children, military, and social programs so the Muslim Brotherhood can make promises. What's wrong with the people in this country who keep electing the treasonous bastards that keep selling out our country. Kerry, Obama and the rest of this administration and Congress are selling out the country while the majority of the country sits back in a stupor and let's them steal it and supposed news reporting organizations like MSN totally ignore it hoping you won't notice that they too are sold out to this disgraceful pack of scumbags that lead this country.
   Call, write and e-mail your Congressperson and demand that truth, integrity and patriotism be re-instated in the leadership of this country or we'll clean the whole lot out.

Mar 4, 2013 6:11PM
avatar
Oil is way overpriced and the gas gouging continues. The socialized wall street speculators are a bunch of crooks. Ben needs to stop printing 85 billion a month and giving it to wall street! And put some value back into the US dollar. That will push the price of oil into the bottom . And keep it there.
Mar 4, 2013 5:57PM
avatar
It doesn't really matter what the barrel price is if all the other factors that control the price at the pump are manipulated to achieve a controlled end result now does it!
Mar 4, 2013 9:06PM
avatar

OIL PRICES ARE APPARENTLY MANIPULATED AS ARE ALL OTHER COMMODTIES. BANKS, HEDGE FUNDS, AND TRADERS PUSH PRICES AROUND ALL THE TIME.

OIL IS AN EASY TARGET BUT  SUBSIDIZED SCAMS LIKE ETHANOL PUSH CORN PRICES WAY BEYOND WHERE THEY SHOULD BE AFFECTING ALL FAMILIES FOOD PRICES.

WHERE IS THE OUTRAGE OVER THIS?

I AM BEGINNING TO BELIEVE THE CHINESE GOVERNMENT IS A LOT SMARTER THAN OUR OWN. CHECK OUT WHAT THEY ARE BUYING-OIL AND GAS COMPANIES IN A BIG WAY. WHY?

IT SHOULD BE OBVIOUS THAT AS THEIR 1.3 BILLION PEOPLE MOVE TOWARD MIDDLE CLASS AND THEIR CONSUMPTION ACCELERATES, THEY ARE TRYING TO ASSURE SUPPLIES FOR THE FUTURE.

ADD INDIAS 1.2 BILLION AND IT IS DOUBTFUL THAT ANY SIGNIFICANT DROP IN OIL PRICES WIL OCCUR OVER THE LONG TERM. 

Mar 4, 2013 11:03PM
avatar
Gotta love around the 7th paragraph,...."Absent a headline-making shock, like increasing Middle Eastern tensions"! When in the history of this planet hasn't there been tention in the Middle East? I've been hearing that same SOB story since the 60's. How about getting a new excuse since that one's worn out.
Mar 4, 2013 9:13PM
avatar

Get real about the price of Brent crude driving the price of gas at the pumps.  That's old news.

Fracking and tar sands in NA is a game changer and will drive  those energy markets for the foreseeable future.....and create jobs as well...and inhibit oil imports from the Middle East

 

In spite of this administration!

Mar 5, 2013 9:14AM
avatar
It is time to vote out every Congressman (woman) in office. They have stolen over 15 Trillion from Social Security and Medicare over the last 40-50 years and now Obama is talking about reform 4 months after he was reelected with the promise he would protect these programs. 2014 and 2016 everyone of these lying SOB's must be voted out, they are turning America into a third world country. I did not pay into these programs for 40 plus years to have it pulled out from under me by 435 crooks in Washington that work for Big Oil and Gas companies, Banks, Wall Street and the Defense Contractors that have been ripping us off for 50 plus years. Get out and vote every last one of them out of office in 2014 and 2016 and start over with Politicians that will work for the PEOPLE not Corporations!
Mar 4, 2013 7:31PM
avatar
Someone in Washington told me the reason gas is high is because Our government is spending too much on Social Security payments. I find that hard to believe as I have been paying into the fund for 35 years. another person told me Social security has 2.7 trillion in treasury bonds and is solvent. who's lying here ?
Mar 4, 2013 10:07PM
Mar 5, 2013 12:12AM
avatar
Funny explanation that grown economies taken more oil and thus hike the prices.
The economies are down, but the price is up. Before the Iraq WAr it was less then $30 for the barrel.
Then the War for Oil started and it went up to $120, although the oil consumption did not grew up 3-4 times and there were no shortage of oil since 1980.
    And all the technological advances reduce the oil burning in engines and elsewhere and the consumption of the oil grown up not more the 15% for the last 13 years. How come the price is up 3 times?
This simply is called the Capitalism, the freedom of making masses exploited for the profit of a few.




Mar 5, 2013 9:35AM
avatar

Under Bush, oil peaked at $140/bbl and gas at $4.30/gal in our area in the summertime.  With oil at $100/bbl, gas should be about $3.10/gal but it hasn't ever reached that level even in the wintertime when you don't have to deal with summer blends, etc, even when oil was down to $80/bbl a few months ago.  I thought Obama and the government were supposed to make sure this kind of price-gouiging wasn't happening.  Add it to his list of failures. 

Mar 4, 2013 9:53PM
avatar
These crooks will make money no matter what and they sure don't care about us spending our hard earned money on gas. college students made a car that runs on water, but that will never be on the market.
Mar 4, 2013 11:34PM
avatar
get rid of your oil furnaces, switch now, to hell with the oil companys. I live in the northeast, you would not believe the amount of people switching to coal, and electric. I'm next .  I would not care if I paid the same to heat my home, as long as the oil companys don't get it..
Mar 5, 2013 12:32AM
avatar
Don't you laugh at these stories on oil prices.  Today, oil dropping like a rock.  Yesterday, its going to all time highs.  Talking heads on the web writing stories just to fill up space. 
Mar 5, 2013 8:52AM
avatar
So what I still want to kick a speculator in the nuts!
avatar

Quote

Prices moved too far, too fast. Crude in New York jumped to as high as $98.66 a barrel on Jan. 30, a jump of 7.45% from Dec. 31 and 27% from its 2012 low of $77.69 on June 28. The increase was "beyond the buying capacity of consumers," Schork added

End Quote

 

What reality is Schork living in??? 25 cent a gallon gasoline would be great right now

 

anything above that is "beyond the buying capacity of consumers"

 

Mar 5, 2013 12:35AM
avatar
Last time prices rose higher than normal than tanked, so did our economy!
Mar 5, 2013 8:10AM
avatar

Meanwhile, Goldman Sachs oil market experts predicted last month that crude oil could go to $150 /bbl this year. I guess they wanted to sell high and get short again.

 

Bottom line, no one knows for sure. But, there sure are a lot of highly paid market experts talking about it (i.e., talking their book) who never have to give their salaries and bonuses back when they call it wrong. 

 

How do I get a job like that?

Mar 5, 2013 12:58AM
avatar

Our government claims that there is no price gouging but that is bull. We are destroying our environment and our childrens children will have to pay for our mistakes. It is time for hydrogen power vehicles. Stan Meyer's vehicle runs on water but it seems that our government is not interested the public having  a clean burning fuel where hydrogen is split from oxygen and burned in an engine and comes out as water and can be sent back through the system , but i guess there are too many ignorant people out there to realize that this hydrogen technology exists.

Mar 5, 2013 10:03AM
avatar
why are we still getting oil from the saudis at  over inflated prices. looks like kuwait and the saudis forgot how the united states saved there butts in the gulf war. this is how they still pay us back. all our soldiers killed in the name of oil and greed. what a shame. someday they will get there's. we have billions of barrels of oil here and we ship it elsewhere just so the rich can get richer and the poor and middle class can pay the price. thanks again congress and all you sheet heads. Coravette
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
284
284 rated 2
461
461 rated 3
671
671 rated 4
628
628 rated 5
618
618 rated 6
615
615 rated 7
495
495 rated 8
347
347 rated 9
115
115 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.