Crude Beaten Down
Dec 2nd, 2008 | By Doug Casey | Category: Financial NewsIn the energy market Monday, oil prices tumbled, with crude for January delivery closing at $49.28/barrel, down $5.15. January reformulated gasoline lost 9.84 cents, to $1.1112/gallon.
Crude marked its biggest one-day drop in nearly two months, and settled at its lowest closing price since May 23, 2005.
Traders reacted to an OPEC announcement over the weekend that the cartel has deferred a decision to reduce output until its next regularly-scheduled meeting on December 17.
OPEC will use the time to assess the impact of a 1.5 million-barrel-a-day reduction agreed to in October, but slowing growth means demand will be “much lower” than expected a month ago, the cartel conceded after Saturday’s emergency gathering in Cairo. Nevertheless, “for sure there will be action” in December, secretary general Abdalla el-Badri said yesterday.
“OPEC sent a valentine to the bears,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “It looks like they missed an opportunity to support prices by making a cut sooner rather than later.”
OPEC may be targeting $75 a barrel. That price would be “fair” and would support investment in new fields, Saudi Arabian Oil Minister Ali al-Naimi said over the weekend.
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.