Reply #41: Oil below $65, falling gasoline stocks [View All]

[54anickel]

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081700858.html

LONDON (Reuters) - Oil dropped below $65 a barrel on Wednesday after economic data showing that record prices were stoking U.S. inflation overshadowed tumbling gasoline stocks in the world's biggest consumer.

Unexpected refinery shutdowns in the United States have strained gasoline supplies and helped fire a rally that has lifted oil prices by more than 50 percent this year.


On Wednesday, U.S. figures showed gasoline stocks had fallen by five million barrels last week, far more steeply than analysts had predicted. Oil prices initially raced higher as the market put recent downbeat economic data to one side.

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Signs that record prices were beginning to crimp economic growth threatened to slow a rally that has catapulted oil toward the $82 inflation-adjusted average in 1980, the year after the Iranian revolution.

"The prices are now clearly at the level where we have to start thinking about the effect on demand," said Tony Nunan, a manager at Mitsubishi Corp's petroleum business division.

"But it will take time for the high prices to slash oil demand... You just cannot stop using oil, and people in the United States cannot stop driving."

more...

Guess someone decided it was time to back off markets were hurting, there were rumors of inflation flying around. So much for supply/demand fundamentals and free markets determining the price.

Wasn't it just the other day we read an article that stated oil can continue to rise since there's been no slowdown in demand? Now today, after inflation has finally shown up in the "official" numbers, they are concerned about demand coming down. Like someone woke up and said, "Oops, guess we went too far". :eyes:

Let's see how much profit taking hits oil this week.