Crude Drops Again
Jul 30th, 2008 | By Doug Casey | Category: Financial News, Oil Investment & Alternative EnergyIn energy news, oil traded lower for the day, continuing a string of recent declines since hitting an all-time high over $147 a barrel several weeks ago. Crude for September delivery fell another $2.54 to finish at $122.19 a barrel, its lowest price in 12 weeks. September reformulated gasoline also fell 6.1 cents, ending the day at $3.0132 a gallon.
The main culprits in oil’s decline were a rising dollar and weaker U.S. demand, the inevitable result of high oil prices.
“A stronger dollar translates into weaker crude,” stated Tom Bentz of BNP Paribas (EPA:BNP). “The market is still kind of in this downward trend here in the short term and is having troubling turning back up.”
The bigger effect, however, seems to be that of weak demand for oil in the U.S. New information on worsening demand seems to be arriving daily. Today, the source was Mastercard Inc., which reported Tuesday that consumption of gasoline has dropped for 14 straight weeks under pressure from high prices.
According to John Kilduff of MF Global (NYSE:MF), this is merely the logical extension of the laws of supply and demand.
He remarked that “whether prices drop to $80 … or not, there can only be the unavoidable conclusion that markets are finally working as they are supposed to, as higher prices inevitably act as a brake on demand.”
Source: Crude Drops Again
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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.