So Petrol prices should drop today to under a Buck, since the millisecond oil goes up the up the price, shouldnt it be the same for drops?
Crude oil prices drop nearly $4 a barrel
March 24, 2005 - 7:59AM
Oil prices sank more than $2 a barrel on Wednesday on rising crude supplies in the
United States, a strengthening dollar and signs that China's energy appetite, while still growing, has its limits.
Rising interest rates, which could slow economic growth and energy demand, were also a factor. Brokers noted that technical and speculative trading magnified the selloff.
"When you run up quickly, you can also come off very quickly," said Tom Bentz, a broker with BNP Paribas Commodity Futures in New
York.
Light, sweet crude fell $2.22, or 4 per cent, to settle at $53.81 per barrel on the New
York Mercantile Exchange, where oil futures are down nearly $4 a barrel since the intraday high of $57.60 set last Thursday.
In London, Brent crude for May delivery settled at $53.04, down $1.55 on the International Petroleum Exchange.
Oil is roughly 45 per cent more expensive than a year ago but still
well below the inflation-adjusted peak above $90 a barrel set in 1980.
While petrol futures also fell Wednesday, US prices at the pump are soaring. Nationwide, a gallon of regular unleaded averages $2.11 (55.5 cents a litre), up 21 per cent from a year ago, with half of that gain coming in the past month.
The US Energy Department said in its weekly report that crude oil inventories rose by 4.1 million barrels last week to 309.3 million barrels, or 8 per cent above year ago levels.
The rise in US oil supplies coincided with evidence that the growth in oil demand in China may be slowing.
"The whole Asian region is now in the process of lower growth demand," said Frederic Lasserre of SG Securities in Paris.
In China, India, Thailand and Indonesia, rising domestic energy prices were dampening demand, said Lasserre. In China, for instance, demand was up 15 per cent in November but growth slid to only 3 per cent last month, he said.
Lasserre suggested that crude prices should be no higher than the mid-$40s, saying that supply fears over the past few months had resulted a "premium of at least $8 to $9" a barrel over market fundamentals.
A weak dollar also has factored into this year's price surge, so the strengthening of the US currency this week has been having the opposite effect on the value of oil and other commodities.
While the oil price rally appears to have hit a wall, traders were confident that the era of high oil prices is not over.
"High energy prices will be with us for quite a long time," said James Cordier, president of
Liberty Trading Group in St. Petersburg, Florida.
Cordier said the underlying factors were strong global demand and limited excess production capacity that can be tapped in the event of a supply disruption.
The Organisation of Petroleum Exporting Countries, which produces roughly 40 per cent of the world's oil, agreed last week to boost its output quota by 500,000 barrels a day but that did not cause prices to dip. On Monday, a key OPEC official said the group may raise output by another half million barrels daily.
But Venezuela's oil minister Rafael Ramirez said he had not received any information from fellow OPEC members on the additional increase, and said there was adequate supply.
Tensions and possible outages in key producers Saudi Arabia, Iraq, Nigeria and Venezuela have also helped fuel crude's rise over the past year.
Nigeria's two oil unions said Monday they would begin labour action in April. The African nation is the continent's largest exporter and the fifth-largest exporter to the
United States.