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Home Front Economy

Oil price slides under $55

2008-11-11

Oil prices sank under 55 dollars a barrel on Tuesday to strike a 21-month low as frresh recession worries sparked fresh fears about slowing global energy demand, traders said.
On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December plunged 4.16 dollars to 54.92 dollars per barrel -- a level last seen on Janury 30, 2007.

At the same time, on the New York Mercantile Exchange (NYMEX), light sweet crude for December tumbled 4.09 dollars to 58.32 dollars, the lowest level since March 21, 2007.

"The short-term focus continues to be on weak demand," Barclays Capital analysts wrote in a research note to clients.

Oil prices extended earlier losses on Tuesday after Wall Street skidded lower in opening trade, with investor sentiment unsettled by fears about a collapse of General Motors and more poor corporate news amid the credit crisis.

The market was also undermined by the strengthening dollar which tends to dampen oil demand because dollar-priced crude becomes more expensive for buyers holding weaker currencies.

Posted by:GolfBravoUSMC

#8 Uh, no. Saudi Arabia can make money on $10 oil. Their production cost of oil was about $2 a barrel in August.

Last year oil minister Ali Al-Naimi told reporters that the average barrel of Saudi oil costs just $2 to produce. It sells for $130.

Since the world seems to lack refining capacity, Saudi has been building huge refineries and will be shipping more finished product in the form of fuels, lubricants, and plastics in the future. That will increase their margin even more.

Where do you people get your numbers from?

Posted by: crosspatch 2008-11-11 22:24

#7 IIRC, Iran needs 90/bbl to break even, Saudis 47/bbl to break even, Chavez needs 80/bbl to break even. Saudis and a few others are prepared with enough reserves to weather the dip. The rest are cash flow morons.

Posted by: Alaska Paul 2008-11-11 21:58

#6 "I'm wondering where the bottom is. That the price is still falling says the recession will get significantly worse."

How do you figure? That the price is falling on "fears of declining demand" is something the news made up. The major reason the price is falling in dollars is because the dollar is rising to record levels against other currencies. When the dollar rises, the price of oil in dollars falls.

The price of oil is climbing for people in Europe, not falling.

Markets don't so much change prices on what might happen as they change prices according to what IS happening. For example, the large financial houses had bought huge amounts of oil. Lehman Brothers bought an entire oil tank farm. All that oil is being sold off at fire sale prices, dumped onto the market.

Gold traded at around $875 an ounce on 10/1, it is trading now at about $735 an ounce for the same reason ... a much stronger dollar.

Don't believe the crap you hear on the news. The nincompoop reading that stuff knows less about markets than your dog does.

Posted by: crosspatch 2008-11-11 21:52

#5 I guess the line is too long for the speculators to get their cut of the bailout in order to drive it back up again.

Posted by: Procopius2k 2008-11-11 19:52

#4 cut back, Iran! And keep talking eonomic recovery and fully funding the 12th Imam efforts in Leb and Syria!

/Choke you bastards

Posted by: Frank G 2008-11-11 18:04

#3 I'm wondering where the bottom is. That the price is still falling says the recession will get significantly worse.

Posted by: phil_b 2008-11-11 17:08

#2 To say nothing of the officers in those companies who are making investments in US exploration and new energy technologies.

Posted by: KBK 2008-11-11 15:08

#1 and the hundreds of thousands of princes of the Magic Kingdom are quaking in their harems.

Posted by: anymouse 2008-11-11 14:26

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