Few in oil circles suggest a reversal in long-term demand characteristics just yet, but without question, oil is trending lower now. Oil fell $3.39 to $111.62 per barrel Friday as concern that a global economic slowdown will lower oil consumption growth weighed on the market. Oil's slide accelerated after OPEC lowered its 2008 global oil consumption growth forecast to 1.17% from 1.20%, the Agence France-Presse reported Friday. OPEC accounts for about 40% of the world's oil production.
Oil has fallen 24.2% since hitting a record high of $147.27 on July 11, 2008. Still, investors/readers should keep oil's summer decline in perspective: oil traded at $25 per barrel in 2003, and is still up an astounding 346% since that time.
To put the above increase into perspective, if your annual salary was $50,000 in 2003 and it increased 346%, it would be $223,000 today.
A correction, or worse, for oil bulls?
Energy Trader Jim Dietz told BloggingStocks Friday he still isn't an oil bear, but the data points on the oil-bear side of the ledger are starting to accumulate. "Each day now we seem to get another stat that indicates oil consumption is slowing, but I'm not an oil bull yet. I've been hurt too many times by false breakouts to the downside by this market," Dietz said. "I'll keep watching consumption data in China and India. If consumption growth there continues to slow, then I'll put oil-short trades on." Dietz added that he is presently flat, or had no open energy trading positions.
The other major energy commodities also fell Friday at mid-day. Unleaded gasoline fell 7 cents to $2.84 per gallon, heating oil declined about 5 cents to $3.05 per gallon, and natural gas declined 8 cents to $8.06 per million BTUs.
Dietz said the next key data point for oil is next week's U.S Energy Information Administration's weekly oil inventory data, scheduled to be released Wednesday at 10:35 a.m. EDT. "The key number will be oil inventories. That will influence the market. If U.S. oil inventories rise, that would be another bearish data point," Dietz said. "They'll be less focus on gasoline supplies because the summer driving season is ending."
Oil Analysis: Technical analysts add that the $115-$116 level is a key support/resistance area: if oil closes below $115 for three consecutive days, that would be bearish for oil.
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Reader Comments (Page 1 of 1)
8-15-2008 @ 12:59PM
moonie said...
We are all fed up,. i personally hope oil becomes obsolete i elate in the idea that everthing humanly possible will be done to eliminate oil forever, grrrrrrrrrrrrrrrr
8-15-2008 @ 3:27PM
ba said...
If you want oil to stay lower, keep using less. If we use more, the price will rise again.
Also, try to not use Exxon or Mobile. They will then have to lower their pricie to compete with other gas stations who will in turn, have to lower their prices to compete with Exxon and Mobile.
8-15-2008 @ 6:00PM
Badger The Lion said...
Oil Chart
http://badgerthelion.blogspot.com/search/label/CL