August 25, 2004
HOW LOW IS ITS NATURAL FLOOR?:
Oil Prices Fall for 3rd Day as Fears Ease (JAD MOUAWAD, 8/25/04, NY Times)
Oil prices fell for a third day on Tuesday, retreating from the record highs of near $50 a barrel set last week, as exports from Iraq resumed and traders worried less about supply shortages.
In New York, light low-sulfur crude for October delivery fell 84 cents, to $45.21 a barrel, on Tuesday. On Friday, the last day for trading September contracts, the price briefly hit $49.40 a barrel on the New York Mercantile Exchange before falling to $48.70.
Oil prices remain about a third higher than they were in July, run up by a succession of geopolitical threats to supply - renewed fighting in Iraq, legal squabbling in Russia and political infighting in Venezuela. Most oil-producing countries are pumping all they can, leaving the market little capacity to adjust if a big producer halts exports.
Events in Iraq have dominated trading on the oil markets this month. Prices rose when Iraqi exports were halved, then fell this week on reports that exports had resumed in the north of the country and returned to normal in the south.
"There's a lot of politics in the price, a lot of expectations of the worst," said Mehdi Varzi, senior energy consultant at Dresdner Kleinwort Wasserstein in London.
Since the price hikes have been almost entirely psychological it could fall a long way once it starts down. Posted by Orrin Judd at August 25, 2004 12:01 AM