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.
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.
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.
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.
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!
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.
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.
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
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"
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?
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.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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