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Oil falls again: Is the bubble bursting?
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NEW YORK — The price of oil recorded its biggest weekly drop ever, and a gallon of gas finally pulled back from its record high. So is it time to declare the energy bubble popped?
Experts won't go that far just yet.
"It's too early to say we've seen the worst of it," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. "We would be Pollyannish if we believe one week represents a trend."
Still, with oil recording yet another drop on Friday, some industry experts who just days ago thought there was more juice left in oil's meteoric run are reconsidering.
"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."
Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange — well below its trading record of more than $147 a week earlier.
The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.
Some analysts said a nationwide average of $4 or even lower could be in the offing — almost unthinkable in a summer when there has seemed to be no relief at the pump — although they cautioned that there is no guarantee prices will stay low.
"We're going to see some relief from that relentless march higher," Kloza said.
Gas may be getting just a bit cheaper, but major changes in how Americans live and drive are already in motion.
Car buyers have been fleeing to more fuel-efficient models. U.S. sales of pickups and sport utility vehicles are down nearly 18 percent this year through June, while sales of small cars are up more than 10 percent.
While slashing production of more-profitable trucks and SUVs, automakers have been scurrying to build their most fuel-efficient models faster.
Toyota Motor Corp., which hasn't been able to keep up with demand for its 46-miles-per-gallon Prius hybrid, said last week it will start producing the Prius in the U.S. and suspend truck and SUV production to meet changing consumer demands.
Ford Motor Co. and General Motors Corp. also have announced plans to increase small car production, and GM has said 18 of the 19 vehicles it is launching between now and 2010 are cars or crossovers.
Some brave traders used the week's pullback in oil prices as a chance to buy barrels that suddenly seemed to be on sale. But oil analysts were advising investors to beware.
"Buying here is an opportunity if you are a deep believer in $200 (a barrel), otherwise we think that caution would be better applied," analyst Olivier Jakob of Petromatrix in Switzerland said in a research note.
If oil buyers sense that the slide was overdone, you'll probably notice at the pump quickly.
"If (oil prices) rebound, you're going to see a quick reaction at the gas station, because their profit margins are so stretched," AAA spokesman Geoff Sundstrom said. "They may be very fast bringing prices back up."
In other Nymex trade, heating oil futures fell 5.23 cents to settle at $3.6915 a gallon while gasoline futures edged up 0.73 cent to $3.1709 a gallon. Natural gas futures rose 3.3 cents to $10.57 per 1,000 cubic feet.
In London, Brent crude futures for September delivery rose 88 cents to settle at $130.19 on the ICE Futures Exchange.
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OMG---What will starbucks do?
#1 Posted by houdal on July 18, 2008 at 9:15 p.m. (Suggest removal)
The headline question brings to mind a scene out of Pulp Fiction. About midway Jimmie, Jules and Vincent were commenting on the now immaculate once blood and brain splattered car whilst hoping all is now well. Seconds afterwards "The Wolf" advises them "Let's not go sucking each others d@#ks just yet."
#2 Posted by LGoldstein on July 18, 2008 at 9:29 p.m. (Suggest removal)
It's still too high and will go back up and farther if we don't get our politicians of their butts.
When the political party calls for money tell them: "You put it in your gas tank."
When they feel our pain changes will happen!!
#3 Posted by rtsspeaks on July 19, 2008 at 7:12 a.m. (Suggest removal)
Deja vu all over again. Fond memories of '79. Gas prices rising, supplies tight, folks blathering 'go solar, go wind, no nukes'.
Sanctimonious car-hating gass-offs burp into their bongs, 'mass transit.'
Do you prefer your car to mass transit? Me too. Haven't we tried trolleys, jitneys, and other Euro-socialista anachronisms?
Then as now, wasn't the problem anemic dollars buying less oil? That and of course the usual suspects nixing every proposal except, 'use less energy'?
Remind you of 1992? Wasn't the world ending then as now? Didn't an unknown claim 'change' was the answer, then as now? Remember how they later admitted the economy had grown steadily for six quarters prior to the "Worst Economy in Fifty Years, Dan!', pronunciamento?
How did he say that with a straight face? Childhood coaching from family friend, Armand Hammer?
Do old Webbs run deep? Does, as some say, a global liquidity crisis loom?
Will the bubbles burst just as the 'new JFK' takes the oath?
In our new odor, isn't it nice to recall what the Sovs used to console one another? "Things will either be OK. Or they will not be OK."
Paul Vincent Zecchino
Manasota Key, Florida
19 July, 2008
#4 Posted by paul_vincent_zecchino on July 19, 2008 at 9:23 a.m. (Suggest removal)
Gas prices go up immediately on the news of an increase in the oil price. I guess the gas companies all get their deliveries on the days the oil is its most expensive. The price of oil has been dropping all week and most of the gas stations I pass on a daily basis have not lowered their prices, not even a few cents. Unbelievable. I wonder when they are going to lower their gas prices.
#5 Posted by boatbum on July 19, 2008 at 11:26 a.m. (Suggest removal)
where are all the liberal clowns when any positive news comes out?The doom and gloomers are nowhere to be found.I know why-they are getting ready for Michelle O'bamas visit and are staring in the mirror chanting change,change,change!!
#6 Posted by waldini202 on July 19, 2008 at 12:15 p.m. (Suggest removal)
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