.Lower demand drags oil back towards $60
Oil prices fell to a fresh 17-month low on Monday, trading just above $60 a barrel, on signals of lower energy demand in November, in spite of the arrival of the cold season in the northern hemisphere.
Nippon Oil, Japan’s largest refiner, said it will refine 15 per cent less crude oil next month than it did a year earlier because of weakening domestic demand.
Nymex December West Texas Intermediate dropped as low as $61.30 a barrel, the lowest level since May 2007. WTI later pared some losses to trade 40 cents down on the day at $63.75 a barrel. Natural gas, heating oil and gasoline also fell.
In London, ICE December Brent crude futures lost $3 to hit an intraday low of $59.05 a barrel, its lowest level since February 2007. In late afternoon trading, Brent crude later traded 50 cents down at $61.57 a barrel.
The fall in oil prices came in spite of last week’s Opec oil cartel agreement to cut its production official limit by 1.5m barrels a day in an effort to put a floor on dropping oil prices.
Opec officials said they were monitoring the fall in prices. “Opec was in a no-win situation,” said Stephen Schork, editor of the industry Schork report. “Given that oil prices are in an absolute freefall, they had to cut,” he argued, “[but] on the other hand, in light of a world economy seemingly on the brink of the abyss, Opec was handcuffed with regard to the size of the cut.”
Iran said the oil cartel was ready to cut its production further if last week’s reduction does not stop the slide.
“In case the reduction in production does not stabilise the oil market, Opec will again reduce its production ceiling,” Mohammad Ali Khatibi Khatibi, Iran’s Opec representative, was quoted as saying by the Farhang-e Ashti newspaper in Tehran.
Other commodities prices, including copper, the bellwether of base metals, also fell sharply in early trading as investors unwound positions in what now is seen as a risky asset class.
But they recovered later on bets that the European central banks and the US Federal Reserve will cut interest rates to prop up their economies.
Oliver Jakob, of Swiss-based Petromatrix, the consultant, said financial flows were overall dominated by investors closing old bets of raising prices in commodity indices.
“With volatility indices at levels of systemic breakdowns, it should be expected that more risk is still to be taken off the table, meaning that the waves of indiscriminate selling across asset classes are not yet necessarily over and will dominate in the nearterm over fundamental considerations,” he said in a note to clients.
On the London Metal Exchange, copper jumped 8.8 per cent to $4,015 a tonne, recovering from an earlier low of $3,590 a tonne, its lowest level since September 2005.
Aluminium rose 4.1 per cent to $2,040 a tonne while tin jumped 14.5 per cent to $13,400 as Indonesian producers shut down their smelters.
Gold prices fell slightly as the US dollar strengthened against the euro. In London, spot bullion traded at $732.40 a troy ounce, down $7.30.
Agricultural commodities were mixed, with CBOT December corn rising 7 cents to $3.79¾ a bushel while CBOT November soyabeans jumped 29¼ cents to $8.93 a bushel in a tight market.
The Baltic Dry Index, a global measure of freight costs, posted its sixteenth consecutive daily loss, dropping 4.9 per cent to 1,048 points, its lowest level in six years.
FT
Fuck them, let them eat oil.
Nippon Oil, Japan’s largest refiner, said it will refine 15 per cent less crude oil next month than it did a year earlier because of weakening domestic demand.
Nymex December West Texas Intermediate dropped as low as $61.30 a barrel, the lowest level since May 2007. WTI later pared some losses to trade 40 cents down on the day at $63.75 a barrel. Natural gas, heating oil and gasoline also fell.
In London, ICE December Brent crude futures lost $3 to hit an intraday low of $59.05 a barrel, its lowest level since February 2007. In late afternoon trading, Brent crude later traded 50 cents down at $61.57 a barrel.
The fall in oil prices came in spite of last week’s Opec oil cartel agreement to cut its production official limit by 1.5m barrels a day in an effort to put a floor on dropping oil prices.
Opec officials said they were monitoring the fall in prices. “Opec was in a no-win situation,” said Stephen Schork, editor of the industry Schork report. “Given that oil prices are in an absolute freefall, they had to cut,” he argued, “[but] on the other hand, in light of a world economy seemingly on the brink of the abyss, Opec was handcuffed with regard to the size of the cut.”
Iran said the oil cartel was ready to cut its production further if last week’s reduction does not stop the slide.
“In case the reduction in production does not stabilise the oil market, Opec will again reduce its production ceiling,” Mohammad Ali Khatibi Khatibi, Iran’s Opec representative, was quoted as saying by the Farhang-e Ashti newspaper in Tehran.
Other commodities prices, including copper, the bellwether of base metals, also fell sharply in early trading as investors unwound positions in what now is seen as a risky asset class.
But they recovered later on bets that the European central banks and the US Federal Reserve will cut interest rates to prop up their economies.
Oliver Jakob, of Swiss-based Petromatrix, the consultant, said financial flows were overall dominated by investors closing old bets of raising prices in commodity indices.
“With volatility indices at levels of systemic breakdowns, it should be expected that more risk is still to be taken off the table, meaning that the waves of indiscriminate selling across asset classes are not yet necessarily over and will dominate in the nearterm over fundamental considerations,” he said in a note to clients.
On the London Metal Exchange, copper jumped 8.8 per cent to $4,015 a tonne, recovering from an earlier low of $3,590 a tonne, its lowest level since September 2005.
Aluminium rose 4.1 per cent to $2,040 a tonne while tin jumped 14.5 per cent to $13,400 as Indonesian producers shut down their smelters.
Gold prices fell slightly as the US dollar strengthened against the euro. In London, spot bullion traded at $732.40 a troy ounce, down $7.30.
Agricultural commodities were mixed, with CBOT December corn rising 7 cents to $3.79¾ a bushel while CBOT November soyabeans jumped 29¼ cents to $8.93 a bushel in a tight market.
The Baltic Dry Index, a global measure of freight costs, posted its sixteenth consecutive daily loss, dropping 4.9 per cent to 1,048 points, its lowest level in six years.
FT
Fuck them, let them eat oil.
posted by madtom at 11:49 PM
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