Oil Drops Below $100 a Barrel in N.Y. First Time Since April
By Margot Habiby
Sept. 12 (Bloomberg) -- Oil dropped below $100 a barrel in New York today for the first time since April amid forecasts that a slowing global economy will curtail energy demand.
Futures traded as low as $99.99 a barrel and have erased almost a third of their value since reaching a record $147.27 on July 11. Traders have shrugged off forecasts that Hurricane Ike will hit the Texas coast later today, an OPEC call for reduced supplies and a decline in U.S. inventories.
``This market is definitely marching to a different drummer than the one it was moving to before,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``It's not as interested in supply stuff anymore. It's interested in demand.''
Crude oil for October delivery fell 66 cents, or 0.7 percent, to 100.21 a barrel at 1:54 p.m. on the New York Mercantile Exchange. Futures dropped to the lowest since April 2.
Brent crude oil for October settlement dropped $1.15, or 1.2 percent, to $96.49 a barrel on London's ICE Futures Europe exchange. Brent closed at $98.97 a barrel on Sept. 10, the first settlement price below $100 since March 24. Prices dropped for 11 straight days through yesterday, the longest stretch since the contract was introduced in 1988.
Lower Demand
The International Energy Agency on Sept. 10 reduced its forecast for global oil demand in 2008 and 2009 as high prices curb U.S. consumption. The U.S. government cut its forecast for the price of crude oil, gasoline and winter heating fuels on Sept. 9, citing the slowdown in global demand.
Demand for fuels averaged over the past four weeks declined 3.8 percent, the Energy Department report showed Sept. 10.
The dollar fell from a one-year high versus the euro after reports showed U.S. retail sales unexpectedly declined in August and prices paid to producers dropped for the first time this year. Investors looking to hedge against the dollar's decline helped lead crude oil and other commodities to records earlier this year.
The dollar fell 1.4 percent to $1.4196 from $1.3998 yesterday, when it touched $1.3882, the strongest since Sept. 18, 2007.
Hurricane Ike's eye was 195 miles (320 kilometers) southeast of Galveston, Texas, and moving west-northwest at 12 miles per hour, the National Hurricane Center said in an advisory at 10 a.m. Houston time today. The hurricane, which tripled in size in the Gulf of Mexico, was a Category 2 storm on the Saffir-Simpson scale of intensity with sustained winds of 105 miles per hour.
OPEC Secretary-General Abdalla El-Badri called for members to trim an ``oversupply'' of output by about 500,000 barrels a day at a meeting of the Organization of Petroleum Exporting Countries earlier this week in Vienna. Saudi Arabia said it isn't planning to reduce its oil production.
OPEC's call for members to honor production quotas ``may be the most bearish signal to date in the oil market rout,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York.
`Genuinely Concerned'
``The ministers appear genuinely concerned that the bottom is falling out of global demand and that once-depleted stocks are rebounding with a vengeance,'' he said in a Sept. 10 report. ``Their panic is a testament to how soft the market has become. It is likely to grow even softer.''
U.S. inventories of crude oil dropped 5.8 million barrels to 298 million barrels, the Energy department reported Sept. 10. Supplies were forecast to decline 3.5 million barrels, according to the median of analyst estimates in a Bloomberg News Survey. Most of the decline was in supplies along the West Coast, which are largely disconnected from the rest of the country.
Peyton Feltus, president of Randolph Risk Management in Dallas, said that he's still forecasting oil will be over $100 and close to $150 by the end of the year, amid sustained demand from countries such as China and India.
``I still think we're in a big-picture, demand-drawn bull market, with higher highs and higher lows over a long period of time,'' he said. ``This intermission we've had of late here has really helped those emerging economies focus on growth instead of inflation, and their energy demand growth is intact.''
To contact the reporters on this story: Margot Habiby in Dallas at [email protected]
Last Updated: September 12, 2008 14:00 EDT
By Margot Habiby
Sept. 12 (Bloomberg) -- Oil dropped below $100 a barrel in New York today for the first time since April amid forecasts that a slowing global economy will curtail energy demand.
Futures traded as low as $99.99 a barrel and have erased almost a third of their value since reaching a record $147.27 on July 11. Traders have shrugged off forecasts that Hurricane Ike will hit the Texas coast later today, an OPEC call for reduced supplies and a decline in U.S. inventories.
``This market is definitely marching to a different drummer than the one it was moving to before,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``It's not as interested in supply stuff anymore. It's interested in demand.''
Crude oil for October delivery fell 66 cents, or 0.7 percent, to 100.21 a barrel at 1:54 p.m. on the New York Mercantile Exchange. Futures dropped to the lowest since April 2.
Brent crude oil for October settlement dropped $1.15, or 1.2 percent, to $96.49 a barrel on London's ICE Futures Europe exchange. Brent closed at $98.97 a barrel on Sept. 10, the first settlement price below $100 since March 24. Prices dropped for 11 straight days through yesterday, the longest stretch since the contract was introduced in 1988.
Lower Demand
The International Energy Agency on Sept. 10 reduced its forecast for global oil demand in 2008 and 2009 as high prices curb U.S. consumption. The U.S. government cut its forecast for the price of crude oil, gasoline and winter heating fuels on Sept. 9, citing the slowdown in global demand.
Demand for fuels averaged over the past four weeks declined 3.8 percent, the Energy Department report showed Sept. 10.
The dollar fell from a one-year high versus the euro after reports showed U.S. retail sales unexpectedly declined in August and prices paid to producers dropped for the first time this year. Investors looking to hedge against the dollar's decline helped lead crude oil and other commodities to records earlier this year.
The dollar fell 1.4 percent to $1.4196 from $1.3998 yesterday, when it touched $1.3882, the strongest since Sept. 18, 2007.
Hurricane Ike's eye was 195 miles (320 kilometers) southeast of Galveston, Texas, and moving west-northwest at 12 miles per hour, the National Hurricane Center said in an advisory at 10 a.m. Houston time today. The hurricane, which tripled in size in the Gulf of Mexico, was a Category 2 storm on the Saffir-Simpson scale of intensity with sustained winds of 105 miles per hour.
OPEC Secretary-General Abdalla El-Badri called for members to trim an ``oversupply'' of output by about 500,000 barrels a day at a meeting of the Organization of Petroleum Exporting Countries earlier this week in Vienna. Saudi Arabia said it isn't planning to reduce its oil production.
OPEC's call for members to honor production quotas ``may be the most bearish signal to date in the oil market rout,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York.
`Genuinely Concerned'
``The ministers appear genuinely concerned that the bottom is falling out of global demand and that once-depleted stocks are rebounding with a vengeance,'' he said in a Sept. 10 report. ``Their panic is a testament to how soft the market has become. It is likely to grow even softer.''
U.S. inventories of crude oil dropped 5.8 million barrels to 298 million barrels, the Energy department reported Sept. 10. Supplies were forecast to decline 3.5 million barrels, according to the median of analyst estimates in a Bloomberg News Survey. Most of the decline was in supplies along the West Coast, which are largely disconnected from the rest of the country.
Peyton Feltus, president of Randolph Risk Management in Dallas, said that he's still forecasting oil will be over $100 and close to $150 by the end of the year, amid sustained demand from countries such as China and India.
``I still think we're in a big-picture, demand-drawn bull market, with higher highs and higher lows over a long period of time,'' he said. ``This intermission we've had of late here has really helped those emerging economies focus on growth instead of inflation, and their energy demand growth is intact.''
To contact the reporters on this story: Margot Habiby in Dallas at [email protected]
Last Updated: September 12, 2008 14:00 EDT
