Oil tumbles $4 on slumping demand

[brooklynite]

Source: CNN

NEW YORK (CNNMoney.com) -- Oil prices continued to decline Wednesday, after a government report showed stronger-than-expected inventories and a Federal Reserve report showed a weakening economy.

Light, sweet crude for September delivery fell $3.98 to settle at $124.44 a barrel on the New York Mercantile Exchange.

...snip...

Inventory report: In its weekly inventory report, the U.S. Energy Information Administration, a government agency, said crude stocks fell by 1.6 million barrels last week. Analysts were looking for a drop of 1.9 million barrels, according to a consensus estimate of oil analysts compiled by Platts.

Though crude supplies fell, stockpiles of petroleum-based products rose much more than expected. That sent the price of oil sinking on expectations of weakening demand.

Read more: http://money.cnn.com/2008/07/23/news/economy/oil/?postversion=2008072314

---

Hmm, the Bush Administration is saying that the cause of oil price drops is that demand is down, and supplies are up. Don't see anything here about off shore drilling.....Your response, Senator McCain?

[The Croquist]

1. All hail the recession!

That's free enterprise at work.

PS: Brother can you spare a dime?

[durablend]

2. Whee...now when will we see it at the gas pump?

My Magic 8-ball says this side of never

[Purveyor]

13. Our local mid-michigan price is down to $3.82. A week ago it was $4.19 eom

[JNelson6563]

31. In the north it is down to about 4.07

from 4.24. Of course we gotta gouge the tourists dontcha know? Never mind the poor sods who live and work here and make lower wages than the tourists.
*sigh*

Sadly I have fallen out of love with my previously beloved Michigan.

Julie

[Tandalayo_Scheisskopf]

3. There is more to that than just what they announced:

I watch the commodities markets closely and since the talk out of Congress has gotten hot on the reining in of speculators, the market has been in a pretty steady downward slide. Also, I read an article over at Bloomberg earlier where several investment types said that commodities have lost their luster, after an 8 year upswing and that institutions and investors were bailing.

[aspergris]

4. the general public

I said last week 130 was key support in the front month crude contract. It broke. NEXT!

Btw, the slide in oil pales compared to the slide in corn. down 25% in a couple of weeks.

Generally speaking, when the layperson/general public (and I include people here in that) says it's never going to go down (PEAK OIL PEAK OIL), and its the end of the world - it's not

Contrarianism - it's what's for breakfast!

[Tandalayo_Scheisskopf]

5. Your record is unbroken.

You have called them beautifully. You are quite correct with about corn. It is dropping like gangbusters and I don't see an end in site.

I do wish that people would recognize that markets and high prices are not always force majeur situations and that really and truly they can be the result of over-speculation and yes, even manipulation, such as in the corn industry, where corn producer under-reported the number of acres they planted and hyped the effects of the Mississippi River floods. They have gotten away with it for a number of years as well, because this administration was determined to not use it's regulatory and oversight powers on the markets.

[aspergris]

6. Yes... Thank you

Keep that 130 level in mind. It will be resistance

[Tandalayo_Scheisskopf]

7. What's the next level of downside resistance now?

I ask because we are presently at 124.24, and GLOBEX trades until 5:15 EDT.

[durablend]

8. Does gasoline manage to crash below $3.00/gallon?

Speaking about the market and not pump prices. Do you see this happening or will there be support?

[Tandalayo_Scheisskopf]

10. Right now, it's only at 3.03.

So yeah, it's gonna break 3.

[RebelOne]

24. Where is it only $3.03?

In my area of Georgia, north of Atlanta, it is averaging $3.95, as of this morning.

[Tandalayo_Scheisskopf]

28. It is at 3.03...

On the NYMEX commodity market.

[Zynx]

29. Yeah. People need to understand the difference between wholesale and retail prices.

[aspergris]

16. Gasoline

is leveraged to, but is not the same as oil prices, and it's also sticky due to delay and refinery issues.

Iow, I don't know

Fwiw, about 50% of the rise in gas is due to dollar weakness, not crude strength. Iow, if the dollar didn't have so much suckitude, gas would be about $3.00 right now, not over $4.

This is also evident, if you look at the rise of gas in europe where it's denominated in euros

[aspergris]

15. I need to take a look

at some charts and COT data before I call out some support levels (i think you mean support not resistance).

I was actually hoping for a pop in oil off the cat 2 news, which would offer nice strength to add to my oil short. Never really got it. Oil turned barely green, then turned back down

[Juneboarder]

11. I'll still stay away from the kool-aid...

I don't believe any of these reports that are coming out right now. The Bush Administration is doing everything in their power to keep things from crumbling before he's out of office. I personally think that we have a lot coming our ways in the near future...

[The Croquist]

17. I wouldn't mind corn prices staying high

The US is the worlds largest exporter of corn. We could use the money to buy back Budweiser!

[Leftist Agitator]

19. "We could use the money to buy back Budweiser!"

Yeah, we could. Or we could, y'know, buy a brewery that makes GOOD beer. I suggest this one:



Or this one:



:)

[AwakeAtLast]

32. Yes, because farmers will need to sell high to offset the high costs of diesel

It hasn't gone down enough yet, so if the price of grain tanks, farmers will lose their shirts!

[MannyGoldstein]

12. I Think This Bubble Is Popping

But there's still too much cash in the hands of the rich looking to make a quick buck. It'll move off to another bubble.

[ChairmanAgnostic]

14. solar and wind, anyone?

nice thing about such a bubble is that our homes and businesses would be far cheaper to operate.

[formercia]

22. Using the cash to pump and dump

getting every last drop of blood out of the turnip.

[SahaleArm]

33. Sector rotation temporarily moved back into financials - Dead cat bounce...

Bank of America (BAC), Wachovia Bank (WB), Wells Fargo (WFC), and Merrill Lynch (MER) have all gone up 20-60% in the last 8 days despite horrible earnings while oil stocks have plummeted 20-25%. The financial dead cat bounce will be short-lived. Oil is actually attractive at current pricing.

[susanna]

20. Counterspeak for: "we're about to get caught."

"Hide the evidence."

[formercia]

9. This ought to shake out the market.

Now, we will see who the real serious players are. No wimps allowed.

[Liberal Gramma]

18. I hope the speculators are losing their shirts.

[susanna]

21. Me too. It would be poetic justice. n/t

[Xenotime]

23. And so goes our chances for green energy.

[raccoon]

25. "Tumbles?" That's only a 3.19 % decrease in price. MSM idiots are addicted to

hyperbole. THey are Chicken Littles, all of them.

Just like if a little breeze comes up, it's a windstorm...If the DJIA (which is only 30 stocks anyway) falls just a few dollars, it "plummets" or "plunges."

They are idiots and they exaggerate everything, unless it's some boo-boo Bush or Cheney made. Then they minimize it to pieces.

[ohtransplant]

26. I wish we had the discipline to continue to conserve...

as people have been altering their driving habits, buying smaller cars, mopeds, bicycles, using alternate fuels and many other measures. These are all positive steps for individuals, the country and the planet.

Alas, the crises of the 1970s taught me we won't conserve without the pain (read incentive). I hope I'm wrong this time but if gas goes below $3.00 (and believe me I want it as low as possible.), folks will run out and start buying the SUVs and pick-em-up trucks that are on such a steep discount right now. That, of course, would be short sighted.

Being a marketing guy, this is what I've seen the last couple years; When gas topped $2, we screamed bloody murder - always sensitive to bad PR, they lowered it for a while, then inched it back up over $2.00. We didn't scream nearly as much because we'd been desensitized to the $2 threshold. Voila - the formula! Repeat at $3, then $4. Pavlov, Skinner (not our Skinner!), et al would be proud.

Call me a pessimist but gas should really be in the $2.00 - $2.50 range. We know OPEC and our own oil companies are getting more than filthy rich. It just doesn't seem to bother us as a country...

If we continue to conserve, use alternative fuels, etc..., we might even have a bright energy future with millions of new green jobs. Can we do it without the pain?

[RUMMYisFROSTED]

27. Electioneering?

[Javaman]

30. And after a week and a half of falling more than 20 bucks a barrel, it's only down 2 cents

at my local station.

funny how that works, huh?