here is article this morning on marketwatch, commenting on yesterday's huge futures price decline:
Crude continues fall, below $45
Reports show jump in distillates, including heating oil
By Myra P. Saefong & Steve Goldstein
Last Update: 5:55 AM ET Dec. 2, 2004
LONDON (CBS.MW) -- Crude oil futures continued their descent in electronic trade on Thursday in thin trade.
January-dated light crude futures pulled back to $44.88 per barrel, one session after the biggest one-day fall in history, down 61 cents.
The London-traded Brent contract overnight made the biggest move since the first Gulf War.
"The move yesterday was so big the bulls are terrified of getting in," said one London-based oil futures trader.
Crude futures closed under $46 a barrel Wednesday for the first time since late September and heating-oil and unleaded gasoline prices dropped more than 6 percent following an across-the-board climb in U.S. petroleum inventories.
U.S. data confirmed the biggest climb in distillate supplies in at least three months and a government report showed a tenth weekly rise in crude stockpiles.
The climb in crude inventories "brings stocks to their highest level since Aug. 6 -- 9 million barrels more than at this time last year and within 1.6 million barrels of the five-year average benchmark," Tim Evans, a senior analyst at IFR Markets, said in a note.
"Below-average stock levels are no longer an argument for above-average prices," he said. -(I added bolding)
On that note, crude for January delivery traded as low as $45.35 a barrel on the New York Mercantile Exchange before closing at $45.49, down $3.64, or 7.4 percent, for the session and at its lowest settlement price since Sept. 20.
The session saw "some of the most extensive one-day losses on record," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
Among the products, January heating oil fell 8.9 cents, or 6.3 percent, to close at $1.3293 a gallon. January unleaded gas lost 8.34 cents, or 6.5 percent, to end the day at $1.2012 a gallon. Both closed at their lowest levels since mid-to-late September.
The Energy Department reported a 2.3 million-barrel climb in distillate inventories for the week ended Nov. 26. It pegged the total for the supplies, which include heating oil for the winter season, at 117.9 million barrels -- that's 13 percent below the year-ago level.
The American Petroleum Institute posted an even bigger climb of 4.4 million barrels of distillates for that week to total 122 million barrels.
Distillate inventories haven't climbed anywhere near this much since the week ended Aug. 6, when the API reported a 3.1 million-barrel rise.
The data "show we will have adequate supplies for the next three months and if we can develop a trend of consecutive inventory builds in the next month, prices will absolutely start to decline," said John Person, president of National Futures Advisory Services.
Crude inventories rose for a tenth week, according to the Energy Department, up 900,000 barrels to 293.3 million barrels. The API's data showed a 1.3 million-barrel climb to 294.5 million.
At the same time, motor gasoline supplies climbed 3 million barrels to 205.7 million, according to government data. They were at 204.7 million barrels, up 512,000 barrels, according to the API.
For now, the inventory reports have traders feeling better about supplies, and forecasts of mild weather have them feeling better about demand, said Phil Flynn, a senior analyst at Alaron Trading |
