Lower Oil Prices
May 6, 2011 by staff
Lower Oil Prices, Brent crude fell to 10 last night and 121 a barrel to about 111 and this morning. Economist Graeme Kerner says the lower price is mainly due to a semblance of stability in North Africa and Middle Eastern nations for oil producers in recent days.
Kerner expecting oil prices to fall another and from 10 to 12 and in the coming days. He says he can take a while before the nation is feeling the effects of immersion in oil prices. “It’s too early to tell. I think what we’ve seen in commodity prices in recent times is a bit of weakness and that is the translation, obviously, in a weak Rand and I think that may well accelerate. So unfortunately the lower oil price is not necessary translate into a massive increase in South African consumers in the fuel pump because of the potentially weaker Rand. ”
The crash of a day in crude oil prices, holding the promise of lower gasoline prices, it seems too good to last.
After filling the tank Thursday, prices of commodities, including oil, returned Friday from the employment report that U.S. growth showed the economy stronger than many thought. And a stronger economy means greater demand for fuel.
Oil sank Thursday after weak U.S. report on new applications for unemployment benefits. West Texas Intermediate crude fell 9% and 99.80 a barrel on the New York Mercantile Exchange, raising hopes that rising gas prices peaked last.
On Thursday, the price of benchmark crude West Texas Intermediate fell 9% and 99.80 a barrel on the New York Mercantile Exchange, the first time and has closed below 100 since mid-March.
“If these price levels stick is great news for consumers and could mean that we have seen the highs of 2011,” said Peter Beutel, president of energy risk manager at Cameron Hanover. “There is a probability of 20% to 25% we have seen the highs for the year.”
But Beutel and others said it was unclear whether the settlement was only a temporary problem. Gas prices at the pump rose for 44 consecutive days until Friday, when it was basically flat in 3,984 gallon on average, according to AAA. That is more than 1.05 and higher than a year ago.
“It is clear that the falling price of crude oil is good news, though it is too early to say that we have changed the trend,” says Nigel Gault, chief economist at IHS Global Insight. “If this sticks, worth about 20 cents off the price at the pump.”
Even if oil prices stabilized at levels on Thursday, consumers do not see any immediate effect.
“Oil should stay around 100 and five to 10 days before we see gas prices come,” said Darin Newsom, DTNanlyst energy trading. It is expected that seasonal demand to raise prices by up to 4.20 and a gallon, up from July 2008 and registration of 4.11.
“Maybe (Thursday liquidation) puts the brakes on large increases we’ve seen. Let’s celebrate here for a while until the market realizes that the signals (the trade) is given to us today,” said Newsom.
Crude oil peaked this year and 113.93 a barrel on April 29. It is all time high and 147.27 in July 2008.
Thursday’s drop was part of a broader selloff of silver, gold and other commodity prices also boosted Wall Street. The dollar also rose, helping push oil prices lower.
That all changed on Friday when the April jobs raised the possibility of a steady U.S. economy.
Anthony Sabino, an energy industry executive former business professor at St. John’s University in New York, expects some relief soon, with gas prices, ranging from 4.10 to 4.25 and Labor Day.
“We may be near the tip with respect to prices,” Sabino said, “but no great wave of relief to consumers.”
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