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Crude Oil Continues to Fall on Weak Demand

newsborn

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Traders work in the crude oil futures pit on the floor of the New York Merchantile Exchange, Oct. 27, 2008.

NEW YORK, Oct. 27 -- Crude oil closed at lowest point in nearly 17 months on Monday as investors worried that a global economic slowdown would pare the energy demand in long term.

Light, sweet crude for December delivery dropped to as low as 61.30 U.S. dollars a barrel before edging up to settle at 63.22 dollars a barrel, trading down 93 cents, on the New York Mercantile Exchange. It is oil's lowest settlement since May 29, 2007.


Traders work in the crude oil futures pit on the floor of the New York Merchantile Exchange, Oct. 27, 2008.

The fluctuation of oil prices has been closely following the performance of stocks as investors grew more concerned about economic conditions than other factors influencing oil. With Wall Street tumbling and major indexes in Asia and Europe ending sharply lower, crude futures continued its sliding on Monday. Even the sizable output cut of 1.5 million barrels a day by OPEC failed to ease the sentiment.

Moreover, the dollar rallied to its highest point in more than two and half years against the euro on Monday, which also contributed to the falling of the oil price.

In London, Brent crude for December delivery fell 64 cents to settle at 61.41 dollars a barrel after tumbling near 60 dollars a barrel on ICE Futures Exchange.

Source:http://news.chinaassistor.com/2008/1...and_18042.html
 

sho'nuff

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correct me if im wrong, and i am pretty unknowledgeable about the oil business and finance, but the oil guys are lying to us all this time?

during summer, when the price per barrel was skyrocketing there were reports and interviews on the radio that they dont make alot off the rise in barrel price, that pretty much their profit was marginal where all the rest was overhead to other stuff. claiming that the rise in barrel price is not controlled by them but from the natural cycle of supply and demand

then when the gas prices go down, they make an emergency rush to get barrel prices to go up again.
and then recently was reported Exxon mobil made the most profit out of any business this year.

just sounds contradictory to what they said.

i mean, when gas rose to over 2 dollars per gallon years ago, people were already complaining. now that they are settling first time below 3 dollars, they want to jack up the price again??? cant they just give us a break?
 

GQgeek

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Poor Chavez and Ahmadinejad are going to take a beating over this.
 

lee_44106

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Originally Posted by GQgeek
Poor Chavez and Ahmadinejad are going to take a beating over this.


or at the very least erase that goofy pompous smirk off of Chavez's face.
 

DNW

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They're just going to cut production. They've got enough money to fuck around with us.
 

Joffrey

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It turns out the price inflation was 50% speculation. Other 50% goes to mid east conflict and high demand. With market turmoil demand and speculation are down. Dollar is strengthening.
 

highgrade

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Originally Posted by sho'nuff
correct me if im wrong, and i am pretty unknowledgeable about the oil business and finance, but the oil guys are lying to us all this time?

during summer, when the price per barrel was skyrocketing there were reports and interviews on the radio that they dont make alot off the rise in barrel price, that pretty much their profit was marginal where all the rest was overhead to other stuff. claiming that the rise in barrel price is not controlled by them but from the natural cycle of supply and demand

then when the gas prices go down, they make an emergency rush to get barrel prices to go up again.
and then recently was reported Exxon mobil made the most profit out of any business this year.

just sounds contradictory to what they said.

i mean, when gas rose to over 2 dollars per gallon years ago, people were already complaining. now that they are settling first time below 3 dollars, they want to jack up the price again??? cant they just give us a break?


are they lying? of course. yes, their profit margin may be relatively low compared to other businesses. but when the price of your product jumps by 100% in a couple of months, even if you're only making 15% profit, that is still going to be a huge fucking number.

the only people that are telling the "truth" would be the gas station operators, who usually bear the brunt of the anger by the consumer. high gas prices are bad for business b/c profits are usually pennies per gallon and more importantly their profits come from selling you junk food in the store, not on the gas. if prices are too high, people fill up less often and by extension dont buy 128 oz slurpees.
 

Gong Tao

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Some oil can be delivered to market very cheaply, say for $69 a barrel. when the price goes up to $70, this oil will be drilled and refined and offered for sale. Other oil is hard to get out of the ground and it may cost $139 a barrel to get it to market. Nobody is going to bother drilling this oil until the price goes up to $140 a barrel.

The amount of something people want to buy changes as the price changes. When the price is high, people will buy less and vice versa. When the supply is limited, prices will rise until the amount people are willing to buy is the same as the amount available for purchase.

When demand goes up, prices will rise. When the price goes up to $140, somebody is drilling the $139 oil and only making $1 profit off of each barrel. But they are also drilling the $69 oil and making $71 profit per barrel. The price of $140 is justified by the cost of production of the $139 (marginal, in economic terms) oil, and because if the price was any lower, demand would increase beyond the supply of oil available. But under these circumstances, companies with access to oil that can be drilled cheaply will make a large profit. They cannot sell the $69 oil and the $139 oil at two different prices for various practical reasons and because it would increase demand as mentioned previously.

Imagining that prices are set by corporate conspiracies is the default position of the economically illiterate.
 

buck.9299

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I read an article the other day that the OPEC is aiming at an oil price of $80/barrel. So we will see if they can accomplish that.
 

FidelCashflow

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I'm just happy gas is back under $1/litre again
 

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