Crude Up Slightly, Drops Below $60 but Recovers
Nov 11th, 2008 | By Doug Casey | Category: Financial NewsIn the energy market Monday, oil eked out a small gain, with crude for December delivery closing at $62.41/barrel, up $1.37 from Friday. December reformulated gasoline added a penny and three-quarters, to $1.3679/gallon.
Early in the day, crude had fallen to $59.10, its lowest level since mid-March, 2007. But every time crude goes “to a new low, a light round of buying emerges to push it up a bit,” said Darin Newsom, a senior analyst at DTN.
Phil Flynn, of Alaron Trading, responded to the Chinese news by calling it “a lot of stimulus that the market wasn’t expecting … It’s a two-year project, and it will increase energy demand from China.”
Flynn added that any gains may not be sustainable, though. “China has gone from having to slow their economy to having to boost it,” he said. “The market is still trying to determine the extent of the global economic downturn. In the meantime, we remain in a trading range, trying to break higher into the [$70 a barrel range] or breaking down in the $50s.”
The big factor is OPEC’s “pledge to cut production even deeper if prices are not in the $70-$90 range,” says Kevin Kerr, editor of Global Commodities Alert. “Giving that threat some teeth is the fact that the Saudis seem to be on board with the cuts.”
Kerr added that it’s clear OPEC is “fearful of an Obama presidency and what the longer-term impact to their industry will be,” and said the cartel will likely “vigorously defend the $60 level.” ”
Source: Crude up slightly - Drops below $60 but recovers
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