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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (78850)	9/25/2006 6:43:44 PM
From: Hope Praytochange	Read Replies (1) \| Respond to of 173976

Oil Prices Fall as Speculators Retreat By HEATHER TIMMONS and CARTER DOUGHERTY LONDON, Sept. 25 — Crude oil prices traded below $60 a barrel today for the first time in six months, as speculators continued their retreat from the commodity markets, worried by cooling economies and an improving picture for oil supplies. Today, the market reacted to news that Iran had agreed to hold talks about its nuclear program, and that the oil giant BP would resume pumping oil from Prudhoe Bay, Alaska, ahead of schedule. But analysts said the decline had as much or more to do with underlying economic factors, particularly slowing economic growth in the United States. The benchmark price for a barrel of light, low-sulfur crude to be delivered in November traded as low as $59.52 a barrel on the New York Mercantile Exchange, before rallying in the last 90 minutes to reach $61.40 a barrel at the close of floor trading, a gain of 76 cents. More broadly, oil prices have fallen 24 percent from their peak in July, when they were driven up on heavy speculation by traders and hedge funds over signs that geopolitical tensions and hurricanes would crimp supply. As it happened, few supply problems actually developed. Where oil prices may be headed next is a matter of considerable debate among experts. “The oil market’s fundamentals have finally asserted themselves,” the Center for Global Energy Studies wrote today in a report. “The upward momentum of oil prices disappeared, and it will therefore take a combination of special factors to bring it back,” said the report by the center, which was founded by a former Saudi petroleum minister. Other market watchers noted that prices for oil for future delivery, which some economists use for their planning purposes, have not fallen as much as spot prices, and that most futures contracts continue to hover around $66 a barrel. “The story is still very much the same for the futures market,” said Eoin O’Callaghan, an oil analyst with BNP Paribas. “That points to more expensive oil in the coming months.” So-called noncommercial buyers, meaning hedge funds and investors rather than the producers and refiners who actually ship and use the oil, have poured money into energy and commodities markets in recent years, believing that growth in places like China, India and Brazil had put the world into a “super cycle” that would continue to drive up prices even if major industrial nations faltered. In recent weeks, many of the noncommercials have bailed out again as prices started to fall. The members of the Organization of Petroleum Exporting Countries have been in telephone contact about the market trend but as yet they have no plans to convene an emergency meeting to address falling prices, an OPEC spokesman said today. The cartel last met on Sept. 11. About 22,000 noncommercial buyers now hold long positions — that is, bets that crude oil prices will rise — according to the most recent report from the Commodity Futures Trading Corporation; in August the figure was 83,000. “It is a huge reversal in position,” said David Kirsch, an oil markets analyst with PFC Energy in Washington. PFC noted in a report today that noncommercials have been reducing their long positions for five straight weeks, and have pushed prices below their 200-day moving average, a significant marker to technical analysts of the market. Kamal Murari, global head of energy marketing for Dresdner Kleinwort, said: “The move down that has taken place has been sharp and sudden. The fact that it has moved as significantly as it has means that any forced liquidation has been mostly priced into the market.” Many market participants think OPEC will act to stem the decline if prices fall to $55 a barrel, Mr. Murari said. He suggested that some of the selling in the oil market may be linked to the recent well-publicized losses by some big investors in natural gas, which may have forced some funds to liquidate other energy assets. For the consumer, retail fuel prices have fallen markedly in the United States, but less so in Europe, where excise taxes are much higher and crude accounts for a proportionally smaller part of the pump price. For the larger economy, falling oil prices may do little now to counteract slowing growth on either side of the Atlantic, economists said. “It doesn’t feed through that if the crude price falls below X, then economic growth will rise by Y,” said Mike Wittner, an energy analyst at Calyon.