Tags: oil | slips | rally

Oil Slips Below $70 for First Time Since October

Friday, 11 Dec 2009 04:10 PM

A nine-month rally in oil prices appeared to falter as a gradual sell-off that began in late October gained momentum.

Crude prices declined Friday for the eighth day in a row. The contract for January delivery gave up 67 cents to settle at $69.87 a barrel on the New York Mercantile Exchange. It's the first time that oil has closed below $70 a barrel since early October.

Prices tumbled as the dollar gained strength and investors took a second look at paltry demand figures in the West.

The declines came even as the International Energy Agency predicted Friday that global oil demand will rise more than previously anticipated next year.

Yet it wasn't the first such report and analysts are now looking for more concrete signs of demand from both consumers and industry.

"How do you know when the economic recovery really begins? It is when real oil demand growth appears," analyst Phil Flynn said in a report. "Not just artificial demand growth being propped up with smoke and mirrors, but demand growth that comes with solid economic activity and global growth."

The IEA, an energy watchdog for the biggest crude consuming nations, said it raised its estimates for 2010 global oil demand because of increased economic activity in Asia and the Middle East.

The Paris-based organization said in its monthly report that crude demand would reach 86.3 million barrels a day in 2010, up 1.7 percent from 2009. Last month, the IEA forecast oil demand of 86.2 million barrels a day in 2010.

Meanwhile, the dollar has surged on a drop in U.S. unemployment and an anticipation that the Federal Reserve may raise interest rates.

Oil contracts, which are priced in U.S. currency, tend to move in the opposite direction of the dollar.

The dollar bounced off of 15-month lows to start the month and crude prices have tumbled by $8 per barrel.

U.S. consumption of petroleum products including heating oil and diesel, has fallen about 20 percent from a year earlier, Barclays Capital said in a report.

"It is really the lack of inspiration in distillate demand that stands out, showcasing the lack of cold weather and no turnaround yet in trucking activity in the U.S.," Barclays said.

Retail gasoline prices are also nearing two-month lows.

Pump prices fell by less than a penny overnight to a new national average of $2.623, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.1 cents cheaper than a month ago and 95.9 cents more expensive than last year.

In other Nymex trading in January contracts, heating oil added less than a penny to settle at $1.9085 a gallon while gasoline added less than a penny to settle at $1.8416 a gallon. Natural gas fell 13.5 cents to settle at $5.163 per 1,000 cubic feet.

In London, Brent crude for January delivery added 2 cents to settle at $71.88 on the ICE Futures exchange.

© 2017 Newsmax. All rights reserved.

1Like our page
2Share
Markets
A nine-month rally in oil prices appeared to falter as a gradual sell-off that began in late October gained momentum.Crude prices declined Friday for the eighth day in a row. The contract for January delivery gave up 67 cents to settle at $69.87 a barrel on the New York...
oil,slips,rally
492
2009-10-11
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved