Oil Prices Swing Down

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) October 6, 2011 --

Oil prices extended losses on Monday, falling to near $78 a barrel, as Europe’s debt crisis roiled markets and falling personal incomes in the U.S. suggested slack demand for fuel. Benchmark oil for November delivery was down $1.07 to $78.17 a barrel in late afternoon Malaysia time in electronic trading on the New York Mercantile Exchange. On Friday, benchmark crude dropped $2.94, or 3.6 per cent, to settle at $79.20 per barrel in New York. Prices haven't finished that low since Sept. 29, 2010. Brent crude was down $1.16 to $101.60 per barrel on the ICE Futures Exchange in London. Oil prices have swung up and down in the last few weeks as the European financial crisis spooked markets. Asian and European stock markets slumped, with London’s FTSE 100 index down 2 per cent on Monday and Tokyo’s Nikkei 225 closing 1.8 per cent lower, another cue for oil to drop, and a stronger dollar also weighed. Commodities including crude are typically traded in dollars, so when the dollar rises it makes oil more expensive for buyers with other currencies, reducing demand. In the U.S., data pointed to further economic troubles heading into a traditionally weak time for petroleum demand. The Commerce Department said that Americans are earning less money, which could affect consumer spending and demand for oil. U.S. data showing a decline in personal incomes suggests that oil prices could continue to fall. Americans earning less money are likely to curb spending on consumer items and fuel.

Meanwhile, the faster-than-anticipated return of Libyan crude exports continues to weigh on the price of brent crude. Although front-month brent remains above $100 a barrel, the December and January contracts have slipped below the important psychological threshold, underscoring expectations that Libyan production will continue to ramp up in the coming months. Libya exported some 1.3 million barrels of oil a day, mostly to Europe, before the outbreak of civil war in February. Those exports virtually disappeared, helping propel brent to nearly $130 earlier this year. Worries that the U.S., the world's biggest oil consumer, might be headed for a double-dip recession have weighed on oil demand, as has Europe's spiralling debt crisis. Both crude futures are and the Dow Jones Industrial Average are down for 2011. Despite turmoil in Libya and disruptions to production in the North Sea, where Brent is sourced, the commodity remains in positive territory for the year.

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