Oil falls to near $36 - Mercedes-Benz Forum

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post #1 of 12 (permalink) Old 01-19-2009, 01:02 AM Thread Starter
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Oil falls to near $36

How come gas is still close to 2 bucks?

Oil falls to near $36 ahead of busy earnings week
Oil falls slightly to near $36 in Asia as investors brace for dismal US corporate results

* Alex Kennedy, Associated Press Writer
* Monday January 19, 2009, 12:33 am EST

SINGAPORE (AP) -- Oil prices fell to near $36 a barrel Monday in Asia as investors eyed a slew of U.S. corporate earnings this week for signs of weakening consumer demand amid the worst recession in decades.

Light, sweet crude for February delivery was down 45 cents at $36.06 a barrel by early afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract, which expires on Tuesday, rose $1.11 on Friday to settle at $36.51. The March contract was trading at $42.28 a barrel.

Investors expect to glean more insight into the extent of the current downturn when hundreds of companies report fourth quarter results this week, including heavyweights Google Inc., US Bancorp, General Electric Co., Microsoft Corp. and Johnson & Johnson.

Investors are bracing for bad numbers after banking giant Citigroup on Friday said it lost $8.29 billion in the fourth quarter and that it was splitting in two to help restore profits.

Concern that a recession in developed countries may be worse than previously expected is eating away at demand for oil and has sent crude prices down about 30 percent from $50.47 a barrel earlier this month and down about 75 percent from $147.27 in July.

"In the short-term, demand is collapsing and the price is going to fall," said Richard Urwin, who helps manage more than $10 billion of stocks, bonds and other investments, including Asian assets, for BlackRock in London. "The risks for the moment are on the downside."

The oil market is closed in the U.S. on Monday for Martin Luther King Jr. Day and on Tuesday the attention of some investors will be diverted to Washington with the inauguration of President-elect Barack Obama.

The Organization of Petroleum Exporting Countries has announced production cuts of 4.2 million barrels a day since September, and the group's members are showing signs of implementing the output reductions.

But many investors are worried the cuts won't be enough as demand from around the world evaporates.

"The OPEC output cuts aren't going to offset demand weakness," Urwin said.

The fall in demand means oil producers have more spare capacity than six months ago, so in the event demand rises on the back of an economic recovery, producers will be able to easily meet that demand, which would slow any jump in prices.

"Even if we see an economic recovery later in the year, I don't think oil is going to rebound very quickly because the degree of excess capacity is quite big," Urwin said.

In other Nymex trading, gasoline futures fell 0.27 cent to $1.16 a gallon. Heating oil was steady at $1.47 a gallon while natural gas for February delivery dropped 9.3 cents to $4.71 per 1,000 cubic feet.
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post #2 of 12 (permalink) Old 01-19-2009, 06:55 AM
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But gas prices continue to climb. The oil companies know that the Bush administration, which enabled them to manipulate the prices, is on its way out, and this is the last chance to steal some more free money.
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post #3 of 12 (permalink) Old 01-19-2009, 09:58 AM
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Oil companies have little to do w/ gas prices. Prices are stuck at close to $2 because most of the gas in the station underground tanks was purchased when prices were higher, and they have to recoup their investment. The other non-oil company problem holding gas prices up is the refineries. Some are down, some are limping along, and others are not able to keep up w/ demand. The refinery problems are the reason that gas prices are $1.50 in some parts of the country and $2 in other places. State standards for "clean" gas are also forcing prices up. So it isn't always, or hardly ever, those mean old oil companies at the bottom of our problems!

Don't believe everything you think
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post #4 of 12 (permalink) Old 01-19-2009, 10:31 AM
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We're back to getting screwed, as the gas-to-oil price charts show another inversion.

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post #5 of 12 (permalink) Old 01-19-2009, 10:47 AM
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Quote:
Originally Posted by Jayhawk View Post
Oil companies have little to do w/ gas prices.
Hi Jay! How you doing today?
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post #6 of 12 (permalink) Old 01-19-2009, 10:52 AM
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Hi Jay! How you doing today?

Don't believe everything you think
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post #7 of 12 (permalink) Old 01-19-2009, 10:55 AM
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Oh crap, I gotta come up with a new avatar by tomorrow.

Should I go back to the Red Sequin Hat, the Pyramid, or the NYPL??

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post #8 of 12 (permalink) Old 01-19-2009, 11:55 AM
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Oh crap, I gotta come up with a new avatar by tomorrow.

Should I go back to the Red Sequin Hat, the Pyramid, or the NYPL??

How 'bout this one? It's what every Man from Mars,den should have...
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Don't believe everything you think
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post #9 of 12 (permalink) Old 01-19-2009, 05:59 PM
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Originally Posted by Jayhawk View Post
Oil companies have little to do w/ gas prices. Prices are stuck at close to $2 because most of the gas in the station underground tanks was purchased when prices were higher, and they have to recoup their investment. The other non-oil company problem holding gas prices up is the refineries. Some are down, some are limping along, and others are not able to keep up w/ demand. The refinery problems are the reason that gas prices are $1.50 in some parts of the country and $2 in other places. State standards for "clean" gas are also forcing prices up. So it isn't always, or hardly ever, those mean old oil companies at the bottom of our problems!
There is only one problem with this explanation. When crude oil prices were going up, gas prices were going up almost instantly. There was none of this" they bought the oil sitting in underground tanks now cheap, so they will take their time raising gas prices." But when oil prices plummet, they take their time to lower the gas prices. So this is a one way street, always meant to maximize profits. And why may I ask, has motor oil price climbed to almost $ 4/quart in the last two months for regular dino oil? Crude oil prices have been steadily falling since August 2008, and at that time a quart of motor oil was about $ 2.80/quart.
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post #10 of 12 (permalink) Old 01-19-2009, 06:25 PM
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It is all very logical, and explained entirely by the laws of supply and demand...

Don't believe everything you think

Last edited by Jayhawk; 01-19-2009 at 06:28 PM.
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