Oil sell-off continues, pushing the price below $120 a barrel
From Times staff writer Elizabeth Douglass:
Gravity continues to work its wonders in the oil market.
Crude prices dived further today to close below the $120-a-barrel mark for the first time in three months, reflecting a struggling economy that is softening fuel demand in the U.S. and elsewhere.
Oil futures for September delivery in New York fell $2.24 to close at $119.17 a barrel, the lowest finish since May 5. Today’s close is about $26, or 18%, below the record of $145.29 on July 3.
"We’ve seen this continued deterioration of price in response to lower demand," said Andrew Lipow, a Houston-based analyst and former trader. "And in four weeks, it’s Labor Day, and the peak summer travel season is over. Plus, there’s been ample supply for our needs, and we continue to receive imports."
What’s more, Lipow said, hedge funds and other big investors that rode the energy bull run this year now may be giving up, putting further downward pressure on prices as speculative money exits the market.
"My opinion is we’re going to $110," he said.
Retail gasoline prices, which have been falling steadily along with the price of oil, are likely to head lower still.
Today, the cost of self-serve in California averaged $4.197 a gallon, down less than a penny overnight, according to AAA. Nationwide, the average price of gas fell a penny overnight to $3.871 a gallon.
The California price peaked at $4.61 a gallon June 19. So your fill-up today is costing about 9% less than it did at the peak.
Photo: Was he betting on $150 rather than $119? An oil trader in New York today. Jin Lee/Bloomberg News
"Your fill up costs 9% less than it did at the peak". However, the article says gas has dropped 18%. The oil companies, who are making ginormous profits, run the price up a lot, then drop it some to make us think we're getting a bargain.
But now, the $4 level has been broken and people "accept" it. Slowly, prices will rise again, then suddenly another huge jump, followed by a slight drop. Disgusting.
Posted by: Chunkdog | August 05, 2008 at 03:53 PM
Amen to the comment above - the oil companies have to be profiting again from retaining profit margins between their buys, production costs and shareholder returns.
Posted by: mike mollet | August 05, 2008 at 04:55 PM
Once again the ultimate law of supply and demand takes effect and lays the market out for the truth, instead of speculation, fear mongering and price gouging. Consumers are like lemmings, accept it all but don't do anything to effect change until you're forced to. All those calls for gas boycotts and now look, with demand down the price of oil is already being impacted. What will it take for society to wake up and hear the Exxon boys laughing at everyone beyond closed doors?
Posted by: emcee | August 05, 2008 at 05:37 PM
I guess big fat oil companies had sucked enough blood out of the poor and middler class. Will they do that again? I hope not. I hope they go to hell after they die. peace out
Posted by: foreclosurespecialist | August 05, 2008 at 07:40 PM
All these nasty, anti-oil company comments. Tsk, tsk. What do oil companies have to do with the price of oil?
Posted by: martscan | August 05, 2008 at 11:34 PM