Wednesday - October 22, 2008

Crude Oil Price Plummets Again

Oil prices tumbled below $68 a barrel Wednesday after the government reported big increases in U.S. fuel supplies—more evidence that the economic downturn is drying up energy demand.

The Energy Information Administration said crude inventories jumped by 3.2 million barrels last week, above the 2.9 million barrel increase expected by analysts surveyed by energy research firm Platts. Gasoline inventories rose by 2.7 million barrels last week, and inventories of distillates, which include heating oil and diesel, rose by 2.2 million barrels.

In morning trading, light, sweet crude for December delivery fell $4.03 to $68.15 on the New York Mercantile Exchange. Earlier, it sank as low as $67.50 a barrel, the lowest level for a front-month contract since June 2007.

The energy markets have also been weighed down by the weak stock market, as investors grow more pessimistic about how long it will take the economy to recover from the current global financial turmoil.

“Oil is now highly correlated with the stock market,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. “People are looking to the Dow for sentiment on the economy.”

The price of crude oil has tumbled 54 percent from its peak of $147.27 reached in mid-July.

In London, December Brent crude fell $3.72 to $66 a barrel on the ICE Futures exchange.

Around here gas is going for $2.62.9 a gallon. If the crude price stays at this level for awhile I expect that price to drop to $2.35 or less. And it ought to cost less to heat your home this winter too. So there is a little bit of a silver lining to this recession at any rate.

Posted by Drew458     on 10/22/2008 at 12:22 PM   
Filed Under: • Oil, Alternative Energy, and Gas Prices •  
• Comments (2) • Trackbacks(0)  Permalink •  

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