November 2, 2004


Crude prices fall to near $50 a barrel: Drop fueled by rise in US supply, easing of heating oil fears (Brad Foss, November 2, 2004, Associated Press)

Oil futures prices sank to their lowest level in nearly a month yesterday on a continuation of the sell-off sparked last week by rising US supplies of crude and easing fears about the refining industry's ability to satisfy heating oil demand. [...]

December crude futures declined by $1.63 to settle at $50.13 per barrel on the New York Mercantile Exchange -- the lowest closing price since Oct. 4, when futures settled at $49.91 per barrel. Prices had fallen as low as $49.30 a barrel in intraday trade. In London, December Brent crude futures fell $1.92 to $47.06 per barrel.

''We could move a couple of bucks more on the downside," said BNP Paribas Futures trader Tom Bentz. Bentz added that worldwide oil supplies remain tight and therefore, ''I'd be a little cautious" about declaring the beginning of the end of high prices. ''The reality is that not a lot has changed fundamentally," he said.

If the market was following fundamentals, rather than psychology and chicanery, it would be under $40.

Posted by Orrin Judd at November 2, 2004 8:33 AM

The pivotal issue is lack of refining capacity, not any of this nonsense about the War on Terror. When the refining capacity increases, now that the price has risen, expect supplies to increase once again. Then the price will fall.

Posted by: Bart at November 2, 2004 10:16 AM

How is the refining capacity, at least in this country, going to increase? Is a new refinery proposed somewhere?

Posted by: Harry Eagar at November 2, 2004 9:59 PM