Crude Closes Below $60, Mexico Hedging Like Crazy
Nov 12th, 2008 | By Doug Casey | Category: Financial NewsIn the energy market Monday, oil sank below the $60 benchmark, with crude for December delivery closing at $59.33/barrel, down $3.08. December reformulated gasoline lost 6.2 cents, to $1.3059/gallon. Early in the day, crude had fallen to $58.32, its lowest level since February, 2007, and yesterday there weren’t enough buyers to push it back over $60.
“Bullish news today on top of the recent Chinese stimulus package and news of Saudi Arabia’s supply cuts failed to overcome economic concerns,” said Sucden Research analyst Michael Davies.
Among that bullish news was a report that militants are threatening to renew attacks on oil facilities in Nigeria. A few months ago, that would have automatically shoved the oil market higher. No longer.
Oil prices will likely “keep skipping along bottom here at the $60 per barrel range until we see the fully-implemented OPEC cuts and some winter demand data hitting the market,” said Neal Ryan, of Ryan Oil & Gas Partners.
And Mexico has reportedly hedged almost all of next year’s oil exports at prices ranging from $70 to $100. That stood in stark contrast to last year, when the world’s sixth-largest producer hedged only 20-30% of exports.
“This is a clear sign that they fear oil prices will remain below $70 a barrel in 2009,” said Kathy Lien, of GFT Forex. Lien added that “we doubt that they are the only oil producing country to start hedging.”
Source: Crude closes below $60 - Mexico hedging like crazy
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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.