FUTURES MOVERS
Oil futures close nearly 5% lower, hold above $70
Traders weigh OPEC uncertainty against global demand concerns
Moming Zhou, MarketWatch
Last update: 5:19 p.m. EDT Oct. 21, 2008
SAN FRANCISCO (MarketWatch) — Crude-oil futures closed with a loss of nearly 5% Tuesday after briefly falling below the $70-per-barrel mark with traders uncertain that a potential production cut by major oil producers will be enough to offset a slowdown in global petroleum demand.
The expiration of the November crude-futures contract, as well as strength in the U.S. dollar, also put pressure on dollar-denominated oil prices.
Crude for November delivery closed at $70.89 per barrel on the New York Mercantile Exchange, down $3.36, or 4.5%, for the trading session. It fell to a low of $69.77 on Globex.
It last traded below $70 on Thursday, when it fell to a low of $68.57, the weakest intraday level since June 2007 for a front-month contract.
December crude fell $2.21, or 3%, to close at $72.18 a barrel. The November contract expired at the close of trading Tuesday.
Crude had been on the rise in the previous two sessions, on speculation that OPEC was poised to cut its production to shore up oil prices.
Edward Meir, an energy analyst at MF Global, estimated that the cartel may cut daily output by 1 million to 2 million barrels. OPEC produced 32 million barrels a day of crude during September, according to a monthly OPEC report.
Failure on tap?
Total U.S. petroleum consumption is projected to fall 830,000 barrels a day this year from 2007, according to the latest forecast from the Energy Information Administration.
‘People have finally woken up and smelled the coffee, and the coffee is flavored green, as in conservation, alternative fuels, and bye-bye to gas guzzlers.’
Given that, he expects to see oil prices at around $60 by January 2009, if not sooner.
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In other energy trading, November heating oil fell 3.3 cents, or 1.5%, to close at $2.1771 a gallon. November natural-gas futures finished at $6.844 per million British thermal units, up 10.3 cents.
November reformulated gasoline fell 2.8 cents, or 1.6%, to end at $1.6919 a gallon.
Analysts at MF Global expect the data to show that crude supplies rose 2.9 million barrels, while distillate inventories climbed 450,000 barrels and motor gasoline supplies climbed 2 million barrels.
The EIA will also release its figures Thursday on natural-gas supplies in storage for the week ended Oct. 17. Global Insight analysts are looking for an increase of 80 billion cubic feet.
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