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Thursday, November 20, 2008
Oil Prices Fall to Three-Year Lows
Ken Sweet
FOXBusiness
As recession fears continue to pound the world markets, oil and the major commodities continued their drop on Thursday as traders bet that demand for raw materials would continue to weaken on economic concerns.
Oil, which only months ago hit an all-time high of $147 a barrel, briefly dropped below $50 a barrel in early morning trading.
Oil & Natural Gas Markets
As of 12 p.m. Eastern time in New York, oil was down $3.25, or nearly 6%, to $50.89 a barrel. Crude had briefly touched below $50 a barrel to $49.91 -- the first time in 22 months.
Several analysts, including Deutsche Bank (DB), cut their full-year view on oil Thursday morning, saying that oil was going to continue to drop in what is an “already-oversupplied market.”
Oil got very close to a key support level of $49.90 a barrel, which was the January 2007 low, but bounced off that low.
According to reports by Deutsche Bank, without a cut in production or without the economy showing signs of getting better, crude could fall as low as $40 a barrel by the end of the month.
The Organization of Petroleum Exporting Countries, commonly known as OPEC, is expected to meet on Nov. 29 in Cairo, Egypt where the cartel is expected to consider an emergency cut in production. Analysts said that OPEC could consider a cut in production as much as three million barrels per day.
Natural gas futures were lower by 33.5 cents, or nearly 5%, to $6.478 per million British Thermal Units. This comes after the U.S. Energy Department said that the U.S.’s stocks of natural gas saw a build of 16 billion cubic feet last week.
Heating oil, a commodity closely tracked during the winter months, was lower by 1.172 cents to $1.7417 per gallon. Reformulated wholesale gasoline was lower by 2.69 cents, to $1.0801 a gallon.
Metals
Gold was higher by $14.60, or 2.06%, to $751.00 an ounce. Silver was lower by 23.5 cents, or 2.52%, to $9.075 an ounce.
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Each Thursday at 8:30 a.m. EST, the government tells us about how many people went through one of the most unpleasant experiences of their lives: filing for unemployment help for the first time. It's essentially a survey, since state unemployment is managed by your state, not the federal government.
The report runs like clockwork, but it¿s notoriously inaccurate. For one thing, the number often has wide swings from week to week, so it's a rare event for the figures to come in exactly as economists predict. Second, it is very seasonal. Folks like school bus drivers often file claims when summer comes around, and other people get retail jobs as the holidays approach. Some economists like to use it to handicap the big monthly employment situation report, but they often do so at their statistical peril
Sometimes, weekly jobless claims make political, rather than economic, noise. If there¿s a big spike in claims, some politicians will often cite the number as a sign the economic sky is falling. But, it's important to remember what the weekly jobless numbers don't tell you: you don't know how long these folks stay unemployed, how long they've been out of work in the first place, or even if they're truly out of work and not just trying to scam the government.
Because it's so unreliable, economists usually put the past four weeks together and look at a moving average. That gives a little better picture of the overall trend, but it's still not a great indicator.
