Oil falls below $US60 a barrel

[ben_meyers]

Source: The Austrailian

From correspondents in Singapore | November 04, 2008
BRENT crude oil dropped below $US60 a barrel today amid concerns over weakening energy demand after data showed US and European economies facing a worsening economic outlook, dealers said.

In morning Asian trade, Brent North Sea crude for December delivery was down 71 cents to $US59.77 a barrel. It had tumbled $US4.84 to settle at $US60.48 per barrel in London overnight.

New York's main contract, light sweet crude for December delivery fell 61 cents to $US63.30 a barrel, after dropping $US3.90 a barrel in US trade.



Read more: http://www.theaustralian.news.com.au/story/0,25197,24600695-12377,00.html

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Dropped through another floor, hello $50. I hope OPEC can feed their oil to their people.

[Skink]

1. All Americans are aware of USD

Don't even have to think about it now.

[ravenna_windream]

3. Wish these drops would also reflect on groceries..

Spent 40 bucks tonight only on like 10 items which would have costed us about 15-20 a year or more ago... It's insane like McCain in the brain -no joke there!

[Why Syzygy]

2. The Royals are expecting

a lot of unrest.

[4lbs]

4. Wasn't the price of oil about $40 before the March 2003 invasion of Iraq?

n/t

[aggiesal]

5. This has nothing to do with "weakening energy" demand.

When the Democrats took over congress and
started asking questions about SPECULATORS,
they all scattered to the winds.
What these "Speculators" did, had to be illegal.
Running up the price to $150/barrel.
They took their profits and ran. The only ones left
are those that got taken, and are trying to recoup
their losses.

[Hawkowl]

7. Exactly!

We need to shout this at people. Supply and demand my fat ass. It is all about market manipulation and creating bubbles then bailing out and leaving others to pick up the tab.

More regulation of markets and business will fix the economy. And yes, taxing the shit out of corporate profits will force them to invest in technology and people and jobs.

[ellisD]

8. How many people actually buy mid-grade?

speaking of supply and demand, I read an interesting article awhile back and it pointed out that if it were true supply and demand, that midgrade would actually be cheaper than regular due to the excess of supply compared to demand, but instead its set at an artificial price point halfway between low and high (which are of course artificially priced themselves). It then went on to explain how they could get rid of midgrade and produce high and low grades in greater amounts and lower the cost of both... you know in some parallel universe where an oil company might put its customers BEFORE its profit

and the market manipulation is what makes this bail out so frustrating! We are supposed to shell out hundreds of billions so they can go on speculating and keeping the price artificially high?

[bagimin]

15. This is a really good point..

I've never seen any vehicle that requires 89 octane...this almost seems like another scam perpetrated against consumers. 89 octane is pointless.

[TwilightZone]

21. They don't "produce" mid-grade.

In many cases, it's just a mix of regular and premium.

[CatholicEdHead]

24. I sometimes do when it is one cent higher or equal to regular grade

[krkaufman]

6. Call me petty, but I almost want oil prices to plummet to nothing ...

... just to make Palin's life governing Alaska that much more difficult the next coupla years, since the drop in revenue would hit Alaska's budget hard. (But come to my senses, not wanting Alaskans or Americans to suffer for some potential schadenfreude; plus, she's done, anyway. No reason to gloat.)

[truthisfreedom]

9. you'll get your wish in about 6 years.

When the demographic of 45-54 year olds disappears as a result of the pill, nobody will be investing in the stock market and the price of oil will fall to nothing.

[muriel_volestrangler]

10. It's hard to know what you really mean, but that sounds like complete rubbish

There's nothing magical about 45-54 year olds; no demographic will 'disappear'; people will not suddenly stop investing in stock markets because of demographics (if there is a world-wide depression, perhaps people would, but that's entirely different), and oil is not dependent on stock market activity. It's used for transport, heating and manufacturing, all over the world, and it's the world-wide demand and supply that determines the price.

[RebelOne]

11. If oil is falling that low, why am I still paying over $2 at the pump?

Last time oil was that price, I was paying about $1.70.

[customerserviceguy]

22. The gasoline you put in your tank today

came from oil that was purchased a short while ago at a higher price. Pump prices should continue to decline as the air in the speculative bubble continues to seep out.

It's been a pretty massive drop, I don't think I've seen anything quite like it before, at least with this commodity.

[humbled_opinion]

12. Soon we won't need Oil at all.

Get us off Oil as quick as possible let the deserts of the Middle East reclaim the land.

[Xenotime]

16. Exactly. I lookforward to the change obama will bring.

[niceypoo]

13. Funny what happens when speculators can't borrow money

to speculate with

[lelgt60]

14. Very interesting point...I haven't seen this mentioned anywhere else...

It's only logical, of course.

Do you know if there's any actual statistics on this? Since all futures contracts are bought on 10:1 or more margin, there's no way of knowing how much cash, if any, the speculators have backing that up. I know of people, for instance, who set their leverage at 2:1 (more like stocks). They only put up 10%, but they have 40% cash to back it up. But, as we know, that's not a requirement. Take that leverage and add to the fact that even the 10% could have been borrowed, and speculators could have huge purchasing capability.

However, if speculators know the source of their originating or backup funds was limited - that loans were no longer available - they might indeed curtail their activity. It doesn't take much to cause the demand side of the curve to go down significantly. I mean, of course, demand for futures - not demand for oil.

[freedomnorth]

17. Happy voting day!

Enjoy your cheap energy during democracy.

[Poseidan]

18. soon as Bush leaves, oil prices plummet

Quite the coincidence.

[progressoid]

19. $1.99 a gallon here. BUT...

I notice that products whose prices rose because of fuel prices have NOT fallen with falling fuel prices.

[LostinVA]

20. They are called "sticky prices," and they won't afll any time soon

They suck.

[customerserviceguy]

23. The products on your store shelf were contracted for

weeks, perhaps months ago, when delivery prices were high. Expect that to change soon, especially as holiday sales fall flat this year.

[Hawkowl]

25. Deflation around the corner

Agreed. Prices are going to fall just like oil. This credit crunch is not over by a long shot. The longer it lasts the more prices will fall. Of course a helluva lot more people are going to lose their jobs.

[depakid]

26. Oops... back up to $70

commodities rising again.

[Hawkowl]

27. temporary

Look, commodities have followed the same exact pattern as all bubbles. Trace it back to the first bubble phenomenon, the Tulip bulb craze of the 17th century. All price bubbles follow this pattern. From the tech stock bubble, to the real estate bubble. The price graph looks like a bubble, thus the term. To complete the bubble pattern, the price must return to pre-bubble inception price. The commodities price bubble has been fueled by rampant speculation and money that no longer exists. First, Congress tightened speculation regulations in the Farm Bill passed in June. That is when oil began its slide. Second, TRILLIONS of dollars have been lost in the mortgage derivative/insurance market. That market has yet to be stabilized--i.e; money is still being lost and commodity positions are being liquidated to prop up reserves.

Advanced monetary economics dictates that as money is removed from the system prices MUST fall. This is Bernake's fundamental guiding principle. He believes that the 1930's exacerbated the Great Depression with a tight money policy and is determined to avoid this mistake. Hopefully he can succeed in the medium term. In the short term, prices will fall.

[depakid]

28. They simply overshot in the other direction

they'll be ion the rise in the mid to long term. Petrol even more so.