Oil prices continued to fall today as a government report showed that gasoline prices in October plunged further than they ever have and home heating oil, natural gas, and liquefied petroleum gas fell substantially.
Light, sweet crude for December delivery fell 56 cents to settle at $54.39 a barrel on the New York Mercantile Exchange. But there were signs that plummeting gas prices have begun to bring American motorists back to the pump.
MasterCard SpendingPulse reported today that even though consumption of gas for the weekend ended Friday was down 2.8 percent from a year ago, it the smallest year-over-year decline in more than two months. Americans used nearly 1 million more barrels per day of gas for the week than they did the previous week.
“Demand destruction has definitely subsided significantly,” said Michael McNamara, a vice president at MasterCard SpendingPulse.
The Labor Department reported to day that wholesale energy prices dropped by 12.8 percent in October, the biggest one-month fall since 1986. All types of fuel declined, with gasoline falling by a record 24.9 percent, also the biggest drop since 1986.
Home heating oil prices fell 9.6 percent, natural gas intended for home uses fell by 5.9 percent, and liquefied petroleum gas dropped by 27.6 percent, the biggest decline in more than three decades. Analysts noted that this is the time of year when energy prices bottom out.
“The first cold blast is a reminder that even if the economy is slow, we still have to heat our house,” said Phil Flynn, an analyst at Alaron Trading Corp.
Energy investors trade in technical ranges, however, and Flynn said if crude prices do fall below $50, oil could be in for another round of selling that could drop the price to $40 per barrel.
Outside of the Nymex trading pits, the remarkable decline in prices has played out at the corner gas station, with Texas, Minnesota and Colorado joining Ohio in the last week as states where average retail gasoline prices fell below $2, according to the Energy Information Administration.
Nationwide, retail gasoline prices in the U.S. fell for an 18th week since the July 4th holiday. Prices plummeted 15.2 cents, or 7.3 percent, to a national average of $2.072 a gallon, according to the IEA. Prices are down more than $1 from a year ago.
Prices at the pump fell nearly 2 cents overnight to $2.068 nationally, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have fallen almost 90 cents in the past month.
U.S. gasoline consumption for the week ended Friday was 9.03 million barrels a day, compared with 8.76 million barrels a day for the week ended Oct. 10, according to the MasterCard Spending Pulse report.
With high prices no longer as big of a concern and with no hurricane activity, it is mostly the weak economy that is keeping demand lower, McNamara said.
MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.
Some market analysts believe that crude prices are steadying with more investors comfortable buying oil in the mid $50 range. Crude prices have fallen 63 percent since reaching a record $147.27 in mid-July.
Oil markets had little reaction to the seizure by pirates of a Saudi supertanker loaded with $100 million in crude oil. The ship today was anchored within sight of impoverished Somali fishing villages. Never before have Somali pirates seized such a giant ship so far out to sea — and never a vessel so large.
The latest hijackings highlighted the vulnerability of even very large ships and the inability of naval forces to intervene once bandits are on board.
Many industry executives believe the fallout in the oil markets is likely to be short-lived.
The head of China’s biggest offshore energy producer said today he thinks oil prices are likely to return to a range of $70 to $80 per barrel, though he did not say when.
CNOOC chairman Fu Chengyu said a conference on Chinese business in Spain that the current price level is based on a panic, but would linger until confidence is restored in the market.
With ripples from the mortgage crisis still rippling across the glob, it is difficult to say when that may happen.
Another executive recently warned of a serious decline in demand in China.
China National Petroleum Corp., the country’s biggest oil company, has suffered a “fairly big impact,” its president, Jiang Jiemin, said in a speech Friday to employees, according to a transcript on the company’s Web site. Jiang gave no details.
“Especially since September, the impact is more obvious and prominent. Basically, it is reflected in such things as a sharp shrinking of consumer demand,” Jiang said, according to the transcript.
Many industry experts had looked to China and India to continue buying crude to fuel their booming economies, even if Western nations entered recession. There are growing indications that such emerging economies are still closely linked to the fortunes of Europe and the United States.
Even outside of Nymex, where the benchmark crude is West Texas intermediate, exporting nations both within OPEC and in places like Mexico and Russia are seeing massive declines in crude prices.
The U.S. is a major energy consumer and demand for gasoline and other fuels is plummeting fast.
In other Nymex trading, gasoline futures fell 3.78 cents to settle at $1.1368 a gallon. Heating oil fell 3.31 cents to settle at $1.7579 a gallon while natural gas for December delivery fell 1.7 cents to settle at $6.516 per 1,000 cubic feet. In London, December Brent crude fell 47 cents to settle at $51.84 on the ICE Futures exchange.
Light, sweet crude for December delivery fell 56 cents to settle at $54.39 a barrel on the New York Mercantile Exchange. But there were signs that plummeting gas prices have begun to bring American motorists back to the pump.
MasterCard SpendingPulse reported today that even though consumption of gas for the weekend ended Friday was down 2.8 percent from a year ago, it the smallest year-over-year decline in more than two months. Americans used nearly 1 million more barrels per day of gas for the week than they did the previous week.
“Demand destruction has definitely subsided significantly,” said Michael McNamara, a vice president at MasterCard SpendingPulse.
The Labor Department reported to day that wholesale energy prices dropped by 12.8 percent in October, the biggest one-month fall since 1986. All types of fuel declined, with gasoline falling by a record 24.9 percent, also the biggest drop since 1986.
Home heating oil prices fell 9.6 percent, natural gas intended for home uses fell by 5.9 percent, and liquefied petroleum gas dropped by 27.6 percent, the biggest decline in more than three decades. Analysts noted that this is the time of year when energy prices bottom out.
“The first cold blast is a reminder that even if the economy is slow, we still have to heat our house,” said Phil Flynn, an analyst at Alaron Trading Corp.
Energy investors trade in technical ranges, however, and Flynn said if crude prices do fall below $50, oil could be in for another round of selling that could drop the price to $40 per barrel.
Outside of the Nymex trading pits, the remarkable decline in prices has played out at the corner gas station, with Texas, Minnesota and Colorado joining Ohio in the last week as states where average retail gasoline prices fell below $2, according to the Energy Information Administration.
Nationwide, retail gasoline prices in the U.S. fell for an 18th week since the July 4th holiday. Prices plummeted 15.2 cents, or 7.3 percent, to a national average of $2.072 a gallon, according to the IEA. Prices are down more than $1 from a year ago.
Prices at the pump fell nearly 2 cents overnight to $2.068 nationally, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have fallen almost 90 cents in the past month.
U.S. gasoline consumption for the week ended Friday was 9.03 million barrels a day, compared with 8.76 million barrels a day for the week ended Oct. 10, according to the MasterCard Spending Pulse report.
With high prices no longer as big of a concern and with no hurricane activity, it is mostly the weak economy that is keeping demand lower, McNamara said.
MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.
Some market analysts believe that crude prices are steadying with more investors comfortable buying oil in the mid $50 range. Crude prices have fallen 63 percent since reaching a record $147.27 in mid-July.
Oil markets had little reaction to the seizure by pirates of a Saudi supertanker loaded with $100 million in crude oil. The ship today was anchored within sight of impoverished Somali fishing villages. Never before have Somali pirates seized such a giant ship so far out to sea — and never a vessel so large.
The latest hijackings highlighted the vulnerability of even very large ships and the inability of naval forces to intervene once bandits are on board.
Many industry executives believe the fallout in the oil markets is likely to be short-lived.
The head of China’s biggest offshore energy producer said today he thinks oil prices are likely to return to a range of $70 to $80 per barrel, though he did not say when.
CNOOC chairman Fu Chengyu said a conference on Chinese business in Spain that the current price level is based on a panic, but would linger until confidence is restored in the market.
With ripples from the mortgage crisis still rippling across the glob, it is difficult to say when that may happen.
Another executive recently warned of a serious decline in demand in China.
China National Petroleum Corp., the country’s biggest oil company, has suffered a “fairly big impact,” its president, Jiang Jiemin, said in a speech Friday to employees, according to a transcript on the company’s Web site. Jiang gave no details.
“Especially since September, the impact is more obvious and prominent. Basically, it is reflected in such things as a sharp shrinking of consumer demand,” Jiang said, according to the transcript.
Many industry experts had looked to China and India to continue buying crude to fuel their booming economies, even if Western nations entered recession. There are growing indications that such emerging economies are still closely linked to the fortunes of Europe and the United States.
Even outside of Nymex, where the benchmark crude is West Texas intermediate, exporting nations both within OPEC and in places like Mexico and Russia are seeing massive declines in crude prices.
The U.S. is a major energy consumer and demand for gasoline and other fuels is plummeting fast.
In other Nymex trading, gasoline futures fell 3.78 cents to settle at $1.1368 a gallon. Heating oil fell 3.31 cents to settle at $1.7579 a gallon while natural gas for December delivery fell 1.7 cents to settle at $6.516 per 1,000 cubic feet. In London, December Brent crude fell 47 cents to settle at $51.84 on the ICE Futures exchange.
Source: Associated Press|By MARK WILLIAMS
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