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Since Bush lifted the Oil Drilling Ban oil has dropped to 90 dollars a barrel
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by Albert Milliron | October 6, 2008 at 01:28 pm
347 views | 16 Recommendations | 21 comments
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Since Bush lifted the Oil Drilling Ban oil has droped to 90 dollars a barrel
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Since Bush lifted the Oil Drilling Ban oil has dropped to 90 dollars a barrel
NEW YORK (AFP) — Crude oil nosedived below 90 dollars a barrel Monday as deepening global financial turmoil and plunging stock markets raised fears about slowing demand for energy.
New York's main contract, light sweet crude for November, plunged 6.07 dollars to close at 87.81 dollars a barrel.
In London, Brent North Sea crude for delivery in November tumbled 6.57 dollars to settle at 83.68 dollars a barrel.
Earlier the two futures contracts had fallen to lows last seen in early February, at 87.56 dollars in New York and 83.36 dollars in London.
Crude futures contracts skidded as global stock markets tumbled after a 700-billion-dollar US financial rescue package signed into law Friday failed to calm investors' nerves about frozen global credit flows.
"The oil market is trying to find out exactly how it fits into this new world economic of bailouts and global economic turmoil. Oil is not the best hedge against a market meltdown and China and India (demand) will slow," said Phil Flynn at Alaron Trading.
Crude prices have slumped about 40 percent in three months since they struck record highs of above 147 dollars in July.
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Albert Milliron
Columbia, South Carolina, United States
Most RecentMost Recommended Comments (21)
at 13:37 on October 6th, 2008
politisite, I like this story. It's good stuff.
at 18:53 on October 6th, 2008
politisite, this rarely happens, but even though I originally thought this story was Good Stuff. After reading Actual News Geezer's comment, I did some research. A Business Standard article entitled, "Oil prices fall sharpest in four years", appears to support the comment.
"Fears of an economic slowdown in the US, and a consequent spread of the crisis to Europe and other parts of the world, resulted in oil prices falling over 12 per cent since Monday, the largest weekly fall since early 2004."
If I am wrong on this, please feel free to correct me. Thanks!
at 08:43 on October 7th, 2008
Rhonda,
Thats fine NowPublic allows for differing views and is encouraged. When one does additional research and believes the story does not merit a GS rating it is totally permissable. That is why NP has that ability. Thanks for adding the additional information.
at 14:54 on October 7th, 2008
Thank you for your understanding, politisite. You are very welcome.
at 14:53 on October 6th, 2008
Plusses and minuses on the price changes. Crude is back where it was ten months ago. However, while crude is not cheap it is down where the marginal fields cannot be produced profitably. Some of the offshore fields run $100 a barrel to produce, one limit being steel, which has also shot up in price. Oil uses some 20% of world steel production.
at 14:57 on October 6th, 2008
Thanks for your insightful comment
at 15:57 on October 6th, 2008
politisite, I like this story.
When the stock and shares fell so did the price of oil at this point we should not blame any other factors for this drop in price. The telling factor is once the stock markets settle down and then oil continues to go down in price. It was US$93 last week the US stock market lost 3 % plus yesterday Oil has lost 3% plus also.
at 09:16 on October 7th, 2008
Babel:
In most case commodities rise when stock go down. That is not a perfect case in point but for the most part when stocks go down folk invest in hard assets like gold etc.
at 15:35 on October 7th, 2008
Gold yes oil no...
I am not the only one to make such analysis concerning the market and oil
oil-prices-recover-slightly-after-steep-drop
at 18:13 on October 6th, 2008
Politisite, you can do much better than this.
Surely you understand that oil prices reflect supply and demand. Demand drops, price drops.
And yes, supply increases, price drops.
But none of the potential oil freed by Pres. Bush is yet in pipelines.
As AP reported today, "The slump in energy demand has accelerated beyond the U.S. In India, domestic oil product sales totaled 2.41 million barrels per day in August, the lowest level this year, according to Barclays Capital research. In the same month, Japan's oil demand fell by 8.4 percent."
Oil is down not because there is more US oil, but because the wheels of industry are falling off.
You are a smart guy, Politisite; you can do better than this and you know it.
at 18:42 on October 6th, 2008
As an aside, a friend believes the oil prices are being artificially deflated by oil corporations hoping to make this a vote-for-GOP point in the coming election.
at 21:20 on October 6th, 2008
"Suppose that major suppliers in the oil industry are these manipulative speculators.' as suggested by two Stanford students in Time Magazine.
at 09:13 on October 7th, 2008
Thanks for your Comment. I really think that lower oil isn't going to help the GOP. Now if those guys can turn the economy around and give us a chicken and a fews cuban cigars.. and maybe a new car.. then maybe it will help the GOP. The GOP is in trouble as Bush policies are hurting. I will be very happy when he is gone.. but I am worried about the Replacement
at 02:15 on October 7th, 2008
Thats for sure ANGeezer..
at 09:07 on October 7th, 2008
Thanks for your comments. Supply and demand does not always drive prices. World events do the same all of the time. In addition. When George Bush lifted the off shore drilling ban, congress still had to do the same. The issue is oil futures. The markets respond to what could happen in the future and the off shore lift told the markets that in the future there will be more oil in supply. Everyone knows that the day Bush lifted the ban there was no oil popping out of the ground.
Anyone familiar with the futures market and follows them on a regular basis knows that supply and demand are not always the culprits behind prices. Speculation is what drives those markets. If an issue comes where there is a potential blockade in the supply the price will rise even though there is no difference in the supply chain at that moment. It is ones speculating that the oil supply chains may diminish, thus the prices rise.
Take the futures market out of the equation and you will have spot prices based on the supply and demand at they time. That is not happening today. Some say that speculators have built in 20% to the price of oil.
So I disagree with your basic economic analysis that oil prices are all based on supply and demand.
Anyone who graphs oil prices will see that since Bush lifted the ban, the markets looked at that as the beginning of a larger supply of oil in the chain. It is hard to argue with graphs. There has been little change in supply since Bushes move. There have been a decrease in demand. You are right there. The problem is that the numbers don't jive.
My contention is when the Lift is done in Congress as well, you will see a drop in futures prices as well... with out one drop of oil in the supply chain.
Interim Report on Crude Oil
at 17:58 on October 9th, 2008
Then what are you saying with this story?
Your headline says: "Since Bush dropped the Oil Drilling Ban oil has dropped $90 a barrel."
If you are not making a causal connection, what are you saying? If language is to mean anything, it appears you are saying that the lifting of the ban is responsible for the drop, but common sense and lots of evidence point elsewhere.
A lot of things have happened since Bush dropped the Oil Drilling Ban.
Clearly, the causal connection is missing in the above. We can all agree with that.
If you wish to argue for your headline, put some facts forward. Then we can all chew on your conclusions and do what serious humans do - which is to talk things over.
If the reason is complex, as your response to my original comment suggests, then a much fairer headline would be, "There are many complex reasons for the drop in price of oil."
Politisite, I believe that you want to be taken seriously, but you harm your own dignity by creating such fatuous media products.
You are an intelligent person, and as such you model behaviour for others. We all have a responsibility to maintain high standards for civil discourse; you betray yourself and others when you deviate from our cause.
Mark Schneider
Actual News Geezer
at 09:08 on October 10th, 2008
Just what I said, Since Bush lifted the Ban, prices have dropped. That is a fact! Yes, there are other factors as well. The biggest drop in oil prices came the day Bush lifted the ban. It is called a Psychological factor, another factor that is aside from supply and demand. Since you are an actual journalist, you know that provocative titles are used to facilitate conversation and debate. Just like what has happened today.
Thank You for your rebuke as I discussed in the email you sent me, sometimes a baseball player will wear the same underwear because he has a hitting streak. There is no scientific evidence that his choice in undergarments has helped him in his hitting streak. But to that one player the psychological factor is in play. The oil markets work under supply and demand and Psych factors. Your input has rounded out the story well.
Just a side note: You ever have a professor make a ridiculous statement to encourage discourse? You might be careful attacking my intellect on this one article because of a title that is provocative.
at 06:50 on October 8th, 2008
It is very simple ....to understand.....its greed......For the Oil Companies......No intelligent person believes supply and demand when these oil corporations are raking in profits so huge that indeed they are one of the main culprits to Wall Streets Crash. Prices never come down Polisite.....who's pump are you gasing here?
at 09:01 on October 10th, 2008
The oil profits are quite small compared to other industries like the Pharms etc. What you do is through out year over year profit margins that are misleading. The other attempt to call oil companies thieves is the final number of income after tax. Would an investment of 1 dollar and a return of .07 be a wind fall profit to you? Well oil companies profit margins are from 4-10.6%. If my company made that kind of return I would throw in the towel. Folks are dupped by talking points that twist what is really going on.
at 09:35 on October 10th, 2008
politisite, I like this story. It's good stuff.
The big sell-off during the past month or two was triggered when the funds bailed out. Roughly 50% of the CRB — the commodity index — is in oil. When oil moves, it moves the index. The sell-off brought oil down from a high of $147 to roughly $90, even lower today. It bounced back up to $108 to $110; $108.50 is a good support and resistance level for oil today. The next price up should be $112.50, then $122.50, followed by a couple of more increases. I think the top is going to be $150 to $157.
Yeah, I know the world's economy is slowing and so is demand. Right, on the slowing part, but wrong on the demand part! OPEC meets next week and you can go to the bank (provided yours is still in business) and bet they drop production, as our "so called" friends in the <?xml:namespace prefix = st1 />Middle East have become quite content with $100+ oil. Oil is still traded in USD, therefore, as the dollar drops (and it will, based on the 50 basis pt. drop in the prime rate by the Fed, earlier this week; with more drop(s) to come, as the price of oil raises - Simple!
Oh, almost forgot… also, look for Au to top $1200 p/oz.
-END-
at 21:30 on October 13th, 2008
Thanks Bally you make my point.....The Saudi's determine the price not the market place.
Rev.