Oil prices plunge 6% for the week

Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
That, and general weak market conditions/economic outlook that has depressed stocks the last few days.



http://money.cnn.com/2012/05/04/markets/oil-prices/
May 4, 3.26 PM

NEW YORK (CNNMoney) -- Oil prices have plunged this week, erasing the gains of recent months and dissipating fears of $5-per-gallon gas ... at least for now.

The price of U.S. crude oil slipped beneath $100 per barrel on Friday, dropping about 4% from Thursday, to settle at $98.49.
Oil prices are usually a predictor of gasoline prices, which typically mimic the fluctuations in oil, although sometimes not until days or weeks later.

In reaction to dropping oil prices, gas prices have dropped about 6.5% over the last week, reaching a national average of $3.802 a gallon on Friday, according to the motorist group AAA.

This knocks the price of oil back down to where it was in early February, which was the last time that oil traded below $100 per barrel before it began its meteoric rise. The price of oil peaked in late February, when it exceeded $109 a barrel.
Brent crude oil, which comes from the North Sea, has also been declining. Brent fell more than 3% on Friday to $112.20.....

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A note to those who complain about 'speculators'... they can also lose.

mbig said:

Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
That, and general weak market conditions/economic outlook that has hit stocks the last few days.

Oil prices plunge 6% for the week - May. 4, 2012
May 4, 3.26 PM

A note to those who complain about 'speculators'... they can also lose.

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Great news............

I'm sure all the conservatives will be quick to praise President Obama for his lowering of oil prices, given that they blamed him when prices were high. :lol:

Back in reality, however ... could this be any clearer? When the economy is perceived to be doing well oil prices rise. When there's perceived economic weakness oil prices fall. We are certainly better off with a growing economy and elevated oil prices than we are with a tanking economy and low oil prices. Those are the two choices. There is no scenario in which the economy hums along and oil is cheap. Wishing for low oil prices is tantamount to wishing for economic retraction.

mbig said:

Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
That, and general weak market conditions/economic outlook that has depressed stocks the last few days.

Oil prices plunge 6% for the week - May. 4, 2012
May 4, 3.26 PM

A note to those who complain about 'speculators'... they can also lose.

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President Obama has no choice but to take some credit for this trend, whether he wants to or not. :mrgreen:

mbig said:

Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
That, and general weak market conditions/economic outlook that has depressed stocks the last few days.

Oil prices plunge 6% for the week - May. 4, 2012
May 4, 3.26 PM

A note to those who complain about 'speculators'... they can also lose.

Click to expand...

And gas will probably drop a penny a day per gallon until the next increase and then it will jump 30-40 cents a gallon in one day.Kind of makes me wish that there was a law that states that if gas can only go down a penny a day then it can only go up a penny a day.

There are other aspects to this as well. A more in depth look will show that "U.S. nonfarm payrolls rose by 115,000 in April, less than the gain of 168,000 expected by economists surveyed by Dow Jones Newswires. The unemployment rate fell a 10th of percentage point to 8.1%, Brent crude, the European benchmark, also is down more than 10% off its high of more than $126 and Spain disclosed that it is officially in a recession, while a survey of economic activity in the euro zone in April found a faster contraction than previously thought."

"Oil supply, meanwhile, is looking increasingly ample. Saudi Arabia, the world's largest oil exporter, has increased production to 10 million barrels a day in recent months. And oil inventories in the U.S. continue to swell, rising 10% over the last 10 weeks amid weak demand for crude. There's plenty of supply out there, and now you're introducing more and more demand concerns," said Kyle Cooper, managing partner at IAF Energy Advisors. "One hundred dollars a barrel is not cheap, maybe $95 is more realistic."

Crude Sinks 3.9% to $98.49 a Barrel - WSJ.com

Connery said:

There are other aspects to this as well. A more in depth look will show that "U.S. nonfarm payrolls rose by 115,000 in April, less than the gain of 168,000 expected by economists surveyed by Dow Jones Newswires. The unemployment rate fell a 10th of percentage point to 8.1%, Brent crude, the European benchmark, also is down more than 10% off its high of more than $126 and Spain disclosed that it is officially in a recession, while a survey of economic activity in the euro zone in April found a faster contraction than previously thought."

"Oil supply, meanwhile, is looking increasingly ample. Saudi Arabia, the world's largest oil exporter, has increased production to 10 million barrels a day in recent months. And oil inventories in the U.S. continue to swell, rising 10% over the last 10 weeks amid weak demand for crude. There's plenty of supply out there, and now you're introducing more and more demand concerns," said Kyle Cooper, managing partner at IAF Energy Advisors. "One hundred dollars a barrel is not cheap, maybe $95 is more realistic."

Crude Sinks 3.9% to $98.49 a Barrel - WSJ.com

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I think it also has to do with the ratchteting down of the Iranian nuclear situation -- with several prominent Israelis coming out in recent days and saying that it would be stupid for Israel to take unilateral action.

AdamT said:

I think it also has to do with the ratchteting down of the Iranian nuclear situation -- with several prominent Israelis coming out in recent days and saying that it would be stupid for Israel to take unilateral action.

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There has been an 'Iran Premium' in oil for a few years now. Not just because of speculating there will be trouble, but not allowing speculation on the other side. It is/was perilous to short $100 oil to make $20 but maybe lose $100 if hostilities broke.

Beside the disappointing numbers on employment, you have both the Greek and French elections Sunday.
The more socialist candidate, Hollande, ahead by 6% in France perhaps threatening Austerity there; and if Greece moves Left, their debt deal could be blown.
So you had the Dow down 168 today after losing yesterday as well.
Nervous liquidation on all fronts and in other commodities too.
About the only thing up today was Gold and US T-bills/bonds on that fear.

The story should have read "After several months of oil companies gouging customers, the yearly ass reaming has ended, but just wait until next year."

mbig said:

A note to those who complain about 'speculators'... they can also lose.

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They can, they do and they will continue to, if they hold on to previous gains. The way I see it, a break of 95 brings 92/93 into focus with nothing between it and the optimal 45-degree angle target taken from the last major trend break in the opposite direction. Here's a two year Daily Chart of NYMEX Crude:



Any descent of ascent greater than 45-degrees (mine is an irregular 45-degree plot and not exact) is unsustainable in a market with nominal or standard volatility. So, just like the previous greater than 45-degree bull run got covered to the upside, so to will any greater than 45-degree bear run - which is what the market is exhibiting right now with this close near the 98 level.

If the market stays true to form, according to my analysis, you could be looking at a 78 to 76 NYMEX Crude price level, in under 1.5 years. Something the "experts" were saying would be simply impossible just 2 years ago.

Purple intersection of blue horizontal (previous bearish break of non-optimal 45-degree descent) and blue lateral (optimal 45-degree angle of ascent return to bullish market) lines, indicate a mode price (Bear Target) of near the 86 level.

Either way it goes, oil is setting up a nice big neutral triangle over the next year or so. After that, expect wildly high volatility and price action on a daily basis, until the next major trend is established.

Keep in mind that Crude could also be in a double-top (C to D) phase of a Harmonic Pattern. The CD phase of the standard Harmonic, is typically the 2nd strongest leg of the pattern. This Harmonic looks like larger Bullish Pattern, but the size and scope of the Harmonic will establish the Bearish CD leg, first. Depending on the extend of the CD leg, the D to Projection leg will commence, but only if the Harmonic pattern holds. Given that it is falling into a larger neutral Triangle pattern at the same time, the probability of the Bullish Harmonic completing its full cycle is rather low.

Translation = Expect to see Stable to Falling Prices at the pump in the near term. But, don't expect Airlines to do you a favor by lowering airfares due to lower Jet-A prices. They have a lot of shortfall to recover from 2001/2002, and they have no intention of giving that money back to consumers any time soon.

mbig said:

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Wow, oil prices have "plunged" a whole 5%. I'd hate to see what a "dive" looks like.

jamesrage said:

And gas will probably drop a penny a day per gallon until the next increase and then it will jump 30-40 cents a gallon in one day.Kind of makes me wish that there was a law that states that if gas can only go down a penny a day then it can only go up a penny a day.

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i wish there was a law that mandated multiple new thorium nuclear power stations in every state.

gasoline is always going to fluctuate violently while trending up overall. it's a finite resource, the easy to get oil is getting harder to get, and we are going to have to import tons of it from hostile regions as long as it remains the premier transportation fuel.

danarhea said:

The story should have read "After several months of oil companies gouging customers, the yearly ass reaming has ended, but just wait until next year."

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Really? Oil companies set the price of a barrel of oil? Care to show us a link to back up that crap?

They must be pretty stupid, then. Why end the "yearly ass reaming" right before the summer driving season begins?

sharon said:

Great news............

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Horrible news.

Thankfully, so many people can't afford to drive their cars and don't have a job to go to, demand is down and my gas is cheaper.

This is awesome!

Helix said:

i wish there was a law that mandated multiple new thorium nuclear power stations in every state.

gasoline is always going to fluctuate violently while trending up overall. it's a finite resource, the easy to get oil is getting harder to get, and we are going to have to import tons of it from hostile regions as long as it remains the premier transportation fuel.

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How does a law mandated multiple thorium reactors affect gas prices?

dontworrybehappy said:

Really? Oil companies set the price of a barrel of oil? Care to show us a link to back up that crap?

They must be pretty stupid, then. Why end the "yearly ass reaming" right before the summer driving season begins?

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LOLOL.. Oil companies own very little oil, but American ignorance is pretty stubborn.

sharon said:

LOLOL.. Oil companies own very little oil, but American ignorance is pretty stubborn.

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LOL Sharon comment on ignorance and calling others stubborn. Now that is funny.

jamesrage said:

And gas will probably drop a penny a day per gallon until the next increase and then it will jump 30-40 cents a gallon in one day.Kind of makes me wish that there was a law that states that if gas can only go down a penny a day then it can only go up a penny a day.

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You mean the sort of economic regulation that will hinder small business?

:lamo

Matt Foley said:

How does a law mandated multiple thorium reactors affect gas prices?

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if we build enough electrical infrastructure, we could transition much of our transportation model from gasoline to electric. thorium at least looks hopeful. certainly safer than existing nuclear technology, but i'd support that also if thorium falls through.

mbig said:

Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
That, and general weak market conditions/economic outlook that has depressed stocks the last few days.

Oil prices plunge 6% for the week - May. 4, 2012
May 4, 3.26 PM

A note to those who complain about 'speculators'... they can also lose.

Click to expand...

Looking at this thread, I don't see anyone picking up on the correlation of oil / commodities
price action Vs. the USD value index. Last Tues, on May 1, the dollar began a sharp rally,
Monday of this week being the only down day since. Since last Tues we see the USD
move from 78.60 to it's current level of 80.15 as measured on $DXY.
All things valued in USD usually move inversely to the dollar, it's been this way since
QE2 began, again usually but not always as in everyday.
This isn't rocket science. The US markets follow this inverse move as well as all commodities.
For oil though, geopolitical events cannot be ignored. The Iran oil embargo doesn't begin
until July. If I were anyone touting political victory in regard to gas prices, I'd be holding
my tongue right now.................

mbig said:

There has been an 'Iran Premium' in oil for a few years now. Not just because of speculating there will be trouble, but not allowing speculation on the other side. It is/was perilous to short $100 oil to make $20 but maybe lose $100 if hostilities broke.

Beside the disappointing numbers on employment, you have both the Greek and French elections Sunday.
The more socialist candidate, Hollande, ahead by 6% in France perhaps threatening Austerity there; and if Greece moves Left, their debt deal could be blown.
So you had the Dow down 168 today after losing yesterday as well.
Nervous liquidation on all fronts and in other commodities too.
About the only thing up today was Gold and US T-bills/bonds on that fear.

Click to expand...

There are multiple factors to everything. Of course, the price is always relative to supply and demand. Sometimes supply is a problem, and that can be related to government policy. Sometimes demand is the driving factor and that can be free market or government policy. In the case of oil prices today, Obama has done little (despite is false claim to the contrary) to relieve the price by allowing for the increase in supply. He's also responsible for the sluggish economy (he didn't start it, but he has prolonged the recession). So, when the price of oill goes up because people try to get the economy going, supply is to low and the price goes up. When the economy slows (partly because the cost of oil is limiting now) Obama is also responsible. Then there is the third tangible and that is the value of the dollar. Part of the rise in the cost of oil has been the decline of the dollar as a result of QE1 and QE2 (though that has been helped by the European printing press).

ksu_aviator said:

There are multiple factors to everything. Of course, the price is always relative to supply and demand. Sometimes supply is a problem, and that can be related to government policy. Sometimes demand is the driving factor and that can be free market or government policy. In the case of oil prices today, Obama has done little (despite is false claim to the contrary) to relieve the price by allowing for the increase in supply. He's also responsible for the sluggish economy (he didn't start it, but he has prolonged the recession). So, when the price of oill goes up because people try to get the economy going, supply is to low and the price goes up. When the economy slows (partly because the cost of oil is limiting now) Obama is also responsible. Then there is the third tangible and that is the value of the dollar. Part of the rise in the cost of oil has been the decline of the dollar as a result of QE1 and QE2 (though that has been helped by the European printing press).

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Nope, according to Republicans Obama is the only factor, and he's done an amazing job lowering the price of gas. Thank you Mr. President! :thumbs:

AdamT said:

Nope, according to Republicans Obama is the only factor, and he's done an amazing job lowering the price of gas. Thank you Mr. President! :thumbs:

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I am pretty happy with the way things are going...the price needs to go down further, but I am glad the rollercoaster stopped going up.