Tags: oil

Oil Falls $5, Bailout Worries Continue to Weigh

Tuesday, 23 Sep 2008 01:57 PM

LONDON -- Oil prices fell $5 — reversing direction after Monday's dramatic rally — as

dealers focused on slowing global energy demand and doubts over

a U.S. plan to rescue the financial sector.

A rebound in the U.S. dollar added to weakness across

commodities markets, continuing a strong negative correlation

between the greenback and commodities that has been in place

for at least several months.

U.S. crude for November dropped $5.00 to $104.37 a

barrel by 1703 GMT, after rising nearly $7 Monday. November

Brent crude traded down $5.05 at $100.99.

The losses followed a record surge of nearly 16 percent in

the now-expired U.S. October crude contract Monday. The U.S.

Commodity Futures Trading Commission said it was reviewing the

price jump to ensure trading was valid.

Dealers said Monday's price surge was supported by a weak

dollar plus hopes the $700 billion U.S. bailout plan would ease

the global financial crisis and support demand in the world's

top energy consumer.

But concerns political resistance could delay the rescue

package weighed on global markets Tuesday.

"It started off with a wave of optimism and now perhaps a

bit of realism has kicked in," said Christopher Bellew, a

broker at Bache Commodities.

U.S. Treasury Secretary Henry Paulson urged Congress not to

weigh down the proposed financial system bailout with unrelated

provisions.

WEAK DEMAND

After hitting a record high of $147.27 a barrel in July,

oil dropped to around $91 a barrel last week on mounting

evidence that high energy costs and slowing economic growth

were having an impact on fuel demand in large consuming

nations.

U.S. oil consumption is running about 4 percent below last

year, according to the latest government data.

But prices rebounded after Hurricane Ike battered U.S. oil

infrastructure this month. More than 75 percent of production

remains closed in the Gulf of Mexico, home to a quarter of U.S.

output.

A Reuters poll of analysts ahead of weekly U.S. government

inventory data due Wednesday forecast that crude stocks fell

by 1.3 million barrels last week due to disruptions caused by

Ike.

Distillate stocks were forecast to have fallen by 1.4

million barrels, with gasoline stocks expected to have dropped

by 4 million barrels after Ike shut Gulf Coast refineries.

News that Saudi Arabia cut supplies to oil companies,

reported by Reuters Monday, as well as unrest in Nigeria and

higher-than-expected Chinese imports, also supported prices.

The BP Plc-led Baku-Tbilisi-Ceyhan (BTC) oil

pipeline has shut down for a short period of planned

maintenance, BP said, but exports will not be affected

© 2017 Newsmax. All rights reserved.

1Like our page
2Share
Markets
LONDON -- Oil prices fell $5— reversing direction after Monday's dramatic rally — asdealers focused on slowing global energy demand and doubts overa U.S. plan to rescue the financial sector. A rebound in the U.S. dollar added to weakness acrosscommodities markets,...
oil
421
2008-57-23
 

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