Bernanke says no Recession.
Oil Gyrates on Bernanke Comments
Thursday January 17, 11:13 am ET
By John Wilen, AP Business Writer
Oil Prices Trade in Narrow Range, Giving Up Earlier Gains, After Bernanke Predicts Slowdown
NEW YORK (AP) -- Oil futures fluctuated Thursday after Federal Reserve Chairman Ben Bernanke said he expects slower growth in 2008, but no recession.
Bernanke's comments added to the negative economic sentiment that has been the market's dominant driver in recent days, pushing prices down nearly $10 from their record over $100 a barrel two weeks ago. Despite Bernanke's comments, many investors fear a recession is imminent.
"There's a major concern that if the economy slips into recession, demand for oil will slip," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Bernanke's comments caused oil prices to give up earlier gains of more than $1 that had come on a weaker dollar and forecasts of colder temperatures.
Light, sweet crude for February delivery fell 14 cents to $90.70 on the New York Mercantile Exchange after rising as high as $92.19 earlier. Prices alternated frequently between gains and losses.
Concerns about the economy were further stoked Thursday by a Commerce Department report that construction of new homes fell in 2007 by nearly 25 percent, the largest drop in 27 years. Meanwhile, the American Petroleum Institute, a trade group for oil and gas producers, said high prices cut demand for gasoline and oil in the fourth quarter.
On Wednesday, an International Energy Agency report cut growth predictions for world oil demand this year to 2.3 percent from a previous estimate of 2.5 percent.
At the pump, meanwhile, gas prices fell a cent Thursday to $3.044 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been on the decline in recent weeks, following oil futures' retreat from a record of $100.09 a barrel on Jan. 3.
Other energy futures were mixed Thursday. February heating oil futures rose 0.06 cent to $2.519 a gallon and February gasoline futures rose 0.12 cent to $2.2795 a gallon. February natural gas futures fell 14.3 cents to $7.999 per 1,000 cubic feet after the government reported that inventories fell last week by 59 billion cubic feet, less than the 62 billion cubic feet decline analysts surveyed by Dow Jones Newswires had expected.
In London, March Brent crude futures fell 21 cents to $89.29 a barrel on the ICE Futures exchange.
Traders also were keeping a close eye on OPEC Thursday. Secretary-General Abdalla Salem el-Badri of the Organization of Petroleum Exporting Countries said oil ministers from the group's 12 members scheduled to meet Feb. 1 would consider increasing output if they deem it necessary.
Earlier this week, President Bush asked OPEC to boost production to ease prices.
Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.
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