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Oil falls below $77 on US supply report
Chris Kahn Associated Press Writer
Oil prices tumbled Nov. 12, dropping below $77 a barrel after the government reported that petroleum supplies continue to grow as American drivers and businesses cut way back on energy use.
Benchmark crude for December delivery gave up $2.09 at $77.19 a barrel on the New York Mercantile Exchange. It dropped as low as $76.68 earlier in the day.
The Energy Information Administration said in its weekly report that oil and gas supplies grew more than expected last week, even though many oil companies have shuttered refineries as fuel consumption slumps.
The government report said refineries have slowed production to the lowest levels since September 2008, and they’re importing nearly 15 percent less crude than last year.
For most of the year, oil prices seemed separate from tepid consumer demand. Prices doubled from March to October as the dollar weakened and investors looked to crude and other commodities as relatively safe places to put their money. A weaker dollar also helps investors holding strong international currencies to buy oil contracts.
“It’s not the oil refineries who are buying most of these oil contracts,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. “It’s the financial companies, the ETFs, and other people who are patient enough to sit and wait for prices to go up.”
IEA casts doubt on oil needs Meanwhile, the International Energy Agency, based in Paris, cast doubt on how much more crude would be needed in the world’s largest economy.
“It would seem that the ‘real’ U.S. economy, as opposed to the financial one, is struggling to recover, despite the end of the recession,” the IEA said.
At the same time, the IEA increased slightly its forecast for global oil demand to 84.8 million barrels a day in 2009, 1.7 percent or 1.5 million barrels less than last year. In October, the agency’s forecast for 2009 was of 84.4 million barrels a day.
At the pump, gas prices have slid all month, dropping less than a penny overnight to a new national average of $2.65 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 17.2 cents more expensive than it was last month and 44.8 cents more than a year ago.
In other Nymex trading, heating oil lost 6.44 cents at $1.9914 a gallon. Gasoline for December delivery gave up 5.42 cents at $1.9385 a gallon. Natural gas for December delivery fell 7.5 cents to $4.428 per 1,000 cubic feet.
In London, Brent crude for December delivery fell $1.87 to $76.08 on the ICE Futures exchange.
—Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
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