Date registered: Sep 2004
Vehicle: 1985 500SEC, 1991 190E 2.6.
Location: Los Angeles / Hannover Germany
Mentioned: 12 Post(s)
Quoted: 1043 Post(s)
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.