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| Oil closes below $100 for first time in 6 months |
| 2008-09-15 |
| NEW YORK - Oil prices closed below $100 a barrel for the first time in six months Monday, tumbling more than $5 as the demise of Lehman Brothers and the sale of Merrill Lynch fed worries about the U.S. economy and sparked another dramatic sell-off. Crude prices have now given up virtually all their gains for the year, extending a steep, two-month slide from record levels above $147 a barrel. Oil's pullback — prices tumbled as much as $7 in a special trading session Sunday — also came as early signs suggested that Hurricane Ike delivered less damage than feared to the Gulf Coast energy oil and gas infrastructure. Light, sweet crude for October delivery fell $5.47 to settle at $95.71 a barrel on the New York Mercantile Exchange — oil's first settlement under $100 since March 4. The latest sell-off in oil began Sunday and accelerated Monday as traders digested a day of dramatic upheaval on Wall Street: Lehman Brothers Holdings Inc., a 158-year-old investment bank, filed for bankruptcy after failing to find a buyer and Merrill Lynch & Co. agreed to be bought out by Bank of America Corp. Lehman, Merrill and other big institutional investors were major participants in the commodities boom of the past year, helping push the price of oil, precious metals and grains to historic highs until a slowing global economy helped bring a halt to the rally. Oh. Well screw them then. Investors were also awaiting damage assessments to Gulf energy infrastructure after Ike's passage. U.S. officials said Sunday that Ike destroyed at least 10 oil and gas platforms and damaged pipelines in the Gulf of Mexico. But that represents only a small portion of the 3,800 production platforms in the Gulf and pales in comparison to the catastrophic damage to energy infrastructure doled out by Hurricanes Katrina and Rita three years ago."Fears of widespread refinery damage have been allayed considerably and a number of facilities are coming back up in a timely fashion," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. Still, power outages along the Gulf Coast were slowing efforts to restart some refineries. Meanwhile, virtually all oil production in the Gulf and about 92 percent of natural gas output remained shut-in as of Sunday, according to the U.S. Minerals Management Service. The shutdown of Gulf refineries sent wholesale gasoline prices spiking last week and pushed pump prices back above $4 a gallon in South Carolina, Alabama, Georgia and other states. Gasoline shortages were reported in Maryland, Virginia and North Caroline. On Monday, a gallon of regular rose half a penny overnight to a new national average of $3.842 — up 16.7 cents from Friday, according to auto club AAA, the Oil Price Information Service and Wright Express. Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., said supply shortages caused by Ike and Hurricane Gustav three weeks ago should last at least another two weeks. "That means we're looking at close to $4 a gallon for the rest of September," Kloza said. "People are going to observe more of this disconnect where retail prices move higher even though crude oil is trading below $100 a barrel." 3.57 here at my place, up from 3.35 Thursday. Also adding to the selling pressure Monday was a slightly stronger dollar. A rising greenback encourages investors to unload commodities bought as a hedge against inflation or weakness in the U.S. currency. Oil fell despite reports that militants have launched another attack Nigeria's oil infrastructure in a third day of violence. |
| Posted by:tu3031 |