http://biz.yahoo.com/ap/081219/oil_prices.html

 

Glut of oil creates short-term storage problems

Friday December 19, 6:21 pm ET

By Dirk Lammers, AP Energy Writer

Big premium for oil -- that doesn't have to be delivered right away

 

Traders locking up storage space for crude created a huge rift in prices Friday between oil that must be delivered in several weeks and oil that can be taken in February.

 

The January contract for crude expired Friday and with stockpiles rising at the key storage facility in Cushing, Okla., the price dropped close to a five-year low as brokers and traders attempted to unload supply for whatever price they could get.

 

"If you could find storage for it, it's a way to get rich real quickly," said Peter Beutel, an analyst with Cameron Hanover.

 

With space tight amid a glut in supply, light, sweet crude for January delivery fell $2.35 to settle at $33.87, a level last seen in early 2004.

 

Most traders focused on the February contract, however, which rose 69 cents to settle at $42.36 a barrel on the New York Mercantile Exchange. Because crude contracts bought for February also bought more time to find storage, it sold at a premium of more than $7 a barrel compared contracts expiring Friday.

 

While the January price was largely discounted because the volumes were so low, analyst Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said it did provide a downside target for future sales.

 

The market is sending strong signals that an oversupplied market will remain in place for some time, he said.

 

"I think it's going to work its way down to today's lows in the January futures," Ritterbusch said.

 

Consumers and industries are consuming much less energy than they had before the United States went in to Recession last December. That has led to enormous volatility in crude markets, a topic of discussion Friday from the trading floors of New York to a gathering of world leaders in London.

 

At an energy summit Friday on London, British Prime Minister Gordon Brown warned that a failure to stabilize oil prices could cost the global economy trillions.

 

"Wild fluctuations in market prices harm nations all round the world," Brown said. "They damage consumers and producers alike."

 

OPEC Secretary-General Abdullah El-Badri acknowledged the problem.

 

"We all know that extreme oil prices whether too high or too low are as bad for producers as they are for consumers," El-Badri said.

 

Meanwhile, Zeljko Bogetic, the World Bank's chief economist in Russia, told investors that the oil-rich nation would come under crippling financial pressure and may need to take out loans if crude prices do not rebound.

 

"If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy," Bogetic said.

 

Russia, which has used oil profits during the past eight years to pay down most of its foreign debt, could turn from creditor to borrower if current trends continue.

 

At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, Bogetic said.

 

Earlier this week, the 13-nation Organization of Petroleum Exporting Countries slashed its output quota by 2.2 million barrels a day in a bid to bolster prices that have slid about 70 percent since July.

 

Still, crude prices tumbled this week amid a bevy of dour economic reports suggesting demand for energy will continue to erode.

 

Beutel said the oil market should be growing more bullish after such huge declines, but the steady stream of bad economic news has made everyone skittish.

 

"Until people can just take their eyes off of the demand for five seconds, it doesn't seem like this market is going to have an easy time moving higher," Beutel said.

 

There was word Friday that OPEC may meet again in Kuwait on Jan. 19 to discuss further production cuts.

 

Meanwhile, the national retail average price for a gallon of regular gas rose three-tenths of a penny to $1.673 a gallon overnight, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 37 cents a gallon below what it was a month ago and more than $2.43 below where it was in July when prices peaked at $4.11 per gallon.

 

Before Friday, retail gasoline prices had fallen for 86 straight days.

 

In other Nymex trading, gasoline futures rose less than a penny to settle at 96.93 cents a gallon. Heating oil gained nearly 2 cents to settle at $1.392 a gallon while natural gas for January tumbled 21.4 cents to settle at $5.334 per 1,000 cubic feet.

 

Associated Press writer Alex Kennedy in Singapore, Pablo Gorondi in Budapest, Hungary, Emily Flynn Vencat in London and Catrina Stewart in Moscow contributed to this report.

There was a glut for months before we saw the price collapse. This is not a suprise. I love how countries that massively expanded their budgets when oil was high are now worried about a price collapse. There is no earthly reason why a country cannot prosper at $30/barrel. The Saudi's got filthy rich at a much lower price.

 

It is just like the states and cities with the huge budget problems, they expanded when revenue was high and now are faced with not offering as many services, and not blowing buckets of cash on extras, now that the economy has slowed. When I was a kid, you would go into a government office and it was old tile and army surplus desks and now they are all new stuff with expensive art and scuptures and other things not directly relevant to governing.

There was a glut for months before we saw the price collapse. This is not a suprise. I love how countries that massively expanded their budgets when oil was high are not worried about a price collapse. There is not earthly reason why a country cannot prosper at $30/barrel. The Saudi's got filthy rich at a much lower price.

 

It is just like the states and cities with the huge budget problems, they expanded when revenue was high and now are faced with not offering as many services, and not blowing buckets of cash on extras, now that the economy has slowed. When I was a kid, you would go into a government office and it was old tile and army surplus desks and now they are all new stuff with expensive art and scuptures and other things not directly relevant to governing.

 

GREED, but I agree with what you are saying.

OPEC announced the largest cut in production in their history this week. They are cutting daily production by 2.2 million barrels/day.

Maybe some of those Somali Pirates can offer storage space for OPEC Oil Tankers.

Maybe some of those Somali Pirates can offer storage space for OPEC Oil Tankers.

At this point OPEC is probably hoping that pirates will steal more oil tankers, considering how low the price is... :lol

I've got a spare bedroom at my house. I'd be glad to take a few barrels off of their hands - for a price! :mis2

I've got a spare bedroom at my house. I'd be glad to take a few barrels off of their hands - for a price! :mis2

right, fill up the boiler, and give me a few barrels for reserve. My parents could use it with the 7 degree weather up north.

I don't think there is but does anyone know of a ticker that tracks the price of oil?

 

Thanks.

I don't think there is but does anyone know of a ticker that tracks the price of oil?

 

Thanks.

There are a couple of ETFs...OIL is one, and the other one is USO. You have to look at the percentage change, rather than the price of the ETF. The price of the ETF is not in sinc with the commodity option pricing for oil, but the daily % change and charts are the same.

I don't think there is but does anyone know of a ticker that tracks the price of oil?

 

Thanks.

There are a couple of ETFs...OIL is one, and the other one is USO. You have to look at the percentage change, rather than the price of the ETF. The price of the ETF is not in sinc with the commodity option pricing for oil, but the daily % change and charts are the same.

 

Thanks. I know about OIL and USO. I recently bought USO but the thing is that because as you mentioned they're not in exact sync sometimes you read a headline saying the price of oil is up but then you look at USO and it's down. There's also DXO which moves twice at the rate on oil. You could have more than doubled your money in about 5 days as it went from 1.71 to about 3.60 if you were brave enough to buy it.. unfortunately I wasn't.

I don't think there is but does anyone know of a ticker that tracks the price of oil?

 

Thanks.

There are a couple of ETFs...OIL is one, and the other one is USO. You have to look at the percentage change, rather than the price of the ETF. The price of the ETF is not in sinc with the commodity option pricing for oil, but the daily % change and charts are the same.

 

Thanks. I know about OIL and USO. I recently bought USO but the thing is that because as you mentioned they're not in exact sync sometimes you read a headline saying the price of oil is up but then you look at USO and it's down. There's also DXO which moves twice at the rate on oil. You could have more than doubled your money in about 5 days as it went from 1.71 to about 3.60 if you were brave enough to buy it.. unfortunately I wasn't.

I haven't observed that discrepancy. But I only look at these ETFs a couple of times a week, and mostly follow OIL and not USO.

I don't think there is but does anyone know of a ticker that tracks the price of oil?

 

Thanks.

There are a couple of ETFs...OIL is one, and the other one is USO. You have to look at the percentage change, rather than the price of the ETF. The price of the ETF is not in sinc with the commodity option pricing for oil, but the daily % change and charts are the same.

 

Thanks. I know about OIL and USO. I recently bought USO but the thing is that because as you mentioned they're not in exact sync sometimes you read a headline saying the price of oil is up but then you look at USO and it's down. There's also DXO which moves twice at the rate on oil. You could have more than doubled your money in about 5 days as it went from 1.71 to about 3.60 if you were brave enough to buy it.. unfortunately I wasn't.

I haven't observed that discrepancy. But I only look at these ETFs a couple of times a week, and mostly follow OIL and not USO.

 

http://finance.yahoo.com/news/Oil-prices-t...f-13993243.html

 

According to this story oil went down 12.2% but USO "only" went down 10.7% and OIL went down 12.5%. DXO which supposedly moves at twice the rate "only" went down 12.8%.

 

That's why I was asking.