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Oil prices briefly fall below 48 mid november Original Source Link: (May no longer be active)
http://www.forbes.com/business/feeds/ap/2004/11/09/ap1643966.htmlhttp://www.forbes.com/business/feeds/ap/2004/11/09/ap1643966.html
Associated Press
Update 9: Oil Prices Briefly Fall Below $48 a Barrel
11.09.2004, 12:58 PM
Crude oil futures prices briefly dipped below $48 a barrel Tuesday on expectations that U.S. oil supplies will continue to grow and that heating oil inventories will be adequate this winter.
Light crude for December delivery was 94 cents lower at $48.15 per barrel in early afternoon trading on the New York Mercantile Exchange, rebounding from an intraday low of $47.75.
While oil prices are 13 percent below the record Nymex settlement price of $55.17 set late last month and the near-term trend lines point to further declines, analysts said it is too soon to definitively say the worst is over for fuel-hungry motorists, homeowners and businesses.
"That's the question. Is this uptrend over?" said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York.
"I'm not convinced yet that the highs are in. They could be," Bentz added, "but I'd like to see some more evidence" that the nation's supply of crude and heating oil will be sufficient this winter.
Commercially available inventories of crude in the United States have risen for six straight weeks, pushing down prices, and analysts expected the U.S. Energy Department to report another supply increase when it releases weekly data Wednesday.
Extra barrels of crude are coming into the U.S. market from abroad, thanks to high prices, and daily oil output in the Gulf of Mexico is recovering from damage caused by Hurricane Ivan in mid-September.
Still, the market remains jittery due to the world's limited excess production capacity, which means there is little room to maneuver if there is a prolonged output disruption. The supply cushion is only about 1 percent of the 82.4 million barrels consumed daily worldwide.
Traders remain glued to developments in Iraq and Nigeria, two key exporters that are vulnerable to disruptions in supply.
In Iraq, U.S. forces are pounding the insurgent stronghold of Fallujah in what is expected to be a drawn-out assault to weed out Islamic extremists. Militants have vowed to disrupt Iraq's badly needed oil exports, and a northern pipeline already has been knocked out by saboteurs.
In Nigeria, the labor minister warned Monday that oil workers who participate in next week's planned general strike aimed at halting the country's exports risk losing their jobs. Nigeria is America's fifth-largest source of crude oil.
Some traders believe that U.S. refineries - coming out of pre-winter maintenance - will have enough time to ramp up production of heating oil ahead of the Northern Hemisphere winter, staving off an immediate surge in prices.
Heating oil for December was down less than a penny Tuesday afternoon at $1.3660, while natural gas dropped 9 cents to $7.51 per 1,000 cubic feet.
However, traders and analysts said it's too early to declare the end of high oil prices this year.
"We're in a period of consolidation. ... Once it comes down a bit (more), buyers are going to go back in strong," said Ng Weng Hoong, oil strategist at Energyasia.com in Singapore. "The fundamentals are all there. Demand is still strong, supply is dicey."
In London, Paul Horsnell, head of energy research at Barclays Capital, also said markets could turn bullish soon.
"This is just a lull," he said, suggesting that prices will likely again rise within weeks, as the Northern Hemisphere cold season sets in. For oil markets, he said, "winter doesn't come in November, it comes in December."
Oil prices would have to surpass $90 per barrel to match the inflation-adjusted peak set in 1980.
Associated Press Writer George Jahn in Vienna, Austria, contributed to this report.
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