Oil plummets below $100 as commodities battered

[Auburn85 434]

http://www.reuters.com/article/2011/05/05/us-markets-oil-idUSTRE7446BH20110505?feedType=RSS&feedName=topNews

U.S. crude tumbled below $100 a barrel in heavy trading volume after weak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while U.S. weekly jobless claims hit eight-month highs.

World stocks fell and the 19-commodity Reuters-Jefferies CRB index swooned more than 4.5 percent, heading for its biggest weekly decline since December 2008.

"The longer-term bull cycle is still in place, but this correction may have a life span of several months, as weaker economic data is fueling this correction to a large part," said Sterling Smith, senior analyst for Country Hedging Inc in Minnesota.

Brent crude futures for June traded down $10.28 to $110.91 a barrel at 2:10 p.m. EDT, the fourth straight day of losses, smashing below the 50-day moving average as the sell-off picked up steam after prices dropped below $120 a barrel. Brent was headed for its biggest one-day drop in dollar terms since shortly after the collapse.

U.S. crude dropped below $100 for the first time since March 19. It was off $9.54 at $99.70 a barrel.

Trade levels surged, with volumes for Brent up 80 percent over the 30-day moving average and 70 percent over the 250-day average in afternoon activity. U.S. crude volume was 36 percent over the 30-day average.

The disruption of oil exports from Libya, concerns about the supply impact of unrest in the Middle East and Africa, and the weaker dollar have sent crude to the highest level since 2008, with Brent topping $127 a barrel this year and U.S. crude over $114 a barrel.

Selling pressure on oil and other commodities came on several fronts this week, with investors weighing factors from the death of Osama bin Laden to the impact of higher fuel and commodity costs on the economies of consumer nations to monetary policy in major economies.

"Crude oil is selling off sharply for two primary reasons: QE2 is coming to an end in June and without a QE3 behind it, it will take liquidity out of the market, hurting risky asset classes such as commodities," said Chris Jarvis, senior analyst, Caprock Risk Management in New Hampshire.

"With Osama bin Laden dead, the market is adjusting the geopolitical risk premium down accordingly. Given this, speculative money is being taking off the table."

India's central bank raised rates more than expected on Tuesday, and expectations No. 2 oil consumer China could take similar actions helped push down prices on Wednesday.

The euro headed for its biggest slide against the dollar since November after the European Central Bank hinted interest rates were unlikely to rise next month, short-circuiting a rally that had driven the currency to a 17-month high.

(Reporting by Eileen Moustakis, Gene Ramos, Robert Gibbons, Emma Farge, and Jeffrey Kerr in New York; Francis Kan in Singapore, Claire Milhench and Dmitry Zhdannikov in London and Jeffrey Kerr in New York; Editing by David Gregorio)

[Bottomfeeder 244]

Gas prices won't reflect the recent drop in market prices, but if market prices go up consumer prices will follow. There are severqal factors taking place here one of which is the value of the Federal Reserve Note which directly affects the price of crude on the open market. Speculators along with supply and demand also sets prices. Geopolitical events cause reflexes to affect the market price for crude. I'm sure there are other factors, but the fact remains we pay too much for distillants. Given the fact that the Saudis pay $5 a barrel to pump the crude, $100 market price seems rather extreme.

[jj3jordan 2,125]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

[cptau 169]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

Increase US drilling

Complete the US pipeline to pump the Canadian tar sand oil into the US

Start developing shale oil

build more US refineries that are modern

drop the summer gas blend

get rid of government subsidized ethanol

and the price would drop.

[arnaldoabru 11]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

Increase US drilling

Complete the US pipeline to pump the Canadian tar sand oil into the US

Start developing shale oil

build more US refineries that are modern

drop the summer gas blend

get rid of government subsidized ethanol

and the price would drop.

The oil companies do not want to build new refineries

[Tigermike 3,426]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

Increase US drilling

Complete the US pipeline to pump the Canadian tar sand oil into the US

Start developing shale oil

build more US refineries that are modern

drop the summer gas blend

get rid of government subsidized ethanol

and the price would drop.

The oil companies do not want to build new refineries

Got a link for that?

It's the dims and their envirowhacko buds that have stopped new refineries from being built.

[arnaldoabru 11]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

Increase US drilling

Complete the US pipeline to pump the Canadian tar sand oil into the US

Start developing shale oil

build more US refineries that are modern

drop the summer gas blend

get rid of government subsidized ethanol

and the price would drop.

The oil companies do not want to build new refineries

Got a link for that?

It's the dims and their envirowhacko buds that have stopped new refineries from being built.

One of many. Also the book 'The Tryanny of Oil'" Gives the history of the oil companies buying smaller refinery's and closing the down.

http://articles.latimes.com/2010/mar/11/business/la-fi-refineries11-2010mar11

[Tigermike 3,426]

Agreed. Wonder how low it would go if we actually started drilling about 1000 wells.

Increase US drilling

Complete the US pipeline to pump the Canadian tar sand oil into the US

Start developing shale oil

build more US refineries that are modern

drop the summer gas blend

get rid of government subsidized ethanol

and the price would drop.

The oil companies do not want to build new refineries

Got a link for that?

It's the dims and their envirowhacko buds that have stopped new refineries from being built.

One of many. Also the book 'The Tryanny of Oil'" Gives the history of the oil companies buying smaller refinery's and closing the down.

http://articles.latimes.com/2010/mar/11/business/la-fi-refineries11-2010mar11

From your link:

Energy companies are suffering huge losses from refining because of slumping gasoline use -- a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have begun and will accelerate as corporations strive for profits.

Energy industry executives say they are facing up to what was previously inconceivable: that the nation's appetite for petroleum products may never return to levels seen earlier in the decade, even if a strong economic recovery takes hold.

"None of us will sell more gasoline than we did in 2007," Tony Heyward, group CEO for oil giant BP, said during a recent earnings teleconference.

So it seems to be economic decisions driving those decisions and not some sinister "let's gouge them all we can" greedy urge. But that doesn't fit into the leftist meme does it?

Try again.