Oil falls below $70 a barrel, gasoline stocks rise

LONDON (Reuters) - Oil prices plunged more than $2 to less than $70 a barrel on Thursday following news U.S. gasoline stocks had risen for the first time in two months.

U.S. light sweet crude was $2.23 a barrel lower at $70.05 a barrel by 1555 GMT, just off a session low of $69.85.

Brent futures fell $1.90 to $70.75.


Both contracts fell around $2 on Wednesday after U.S. inventory data signaled a 2.1 million barrel increase in gasoline stocks, soothing worries about inadequate supplies for the approaching U.S. driving season.

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INFLATION-ADJUSTED HIGHS

Fears that sanctions or even military action could lead to the disruption of Iranian crude supplies pushed U.S. crude to a record of $75.35 in April.


So far there is little sign that high prices are having a major impact on the world economy or denting consumption, though they are near to the inflation-adjusted highs that coincided with a sharp reduction in demand growth during the 1980s.

"Crude oil prices are now less than $20/barrel from the monthly peak of $89/barrel reached in November 1979," Barclays Capital wrote in a daily report.

Wednesday's U.S. government data indicated a softening in U.S. gasoline demand.

today.reuters.com... eid=&cap=&sz=13

Huh..? When prices go up for something people buy less of it.

So that Adam Smith guy was right..?!

OT: I hate when people use "impact" when they mean "effect."

I'm sure the flap has had something to do with this. But dont get too excited, just wait till the summer hits! This is a little relieve for a couple of days so we'll stop bitching!

Nothing more.

also dont expect to see any gas price reductions from this either. very interesting how when oil rises 4 or 5 bucks in a few days the increase in gas prices is almost immediate, but when it drops 4 or 5 bucks the price just stays the same....very interesting indeed. we are in this for the long haul and a year or 2 from now we will all be wishing we had $3 gallon gas again.

Ok this is a little unintuitive. Gas station owners can lose money when prices go down and UP. How is this so?

Let’s say I own gas station and I just bought a load of gas and the storage tanks are full. The next day my wholesaler calls me tells me that prices have gone up and my next tank will cost me 10 cents more. I must raise my prices NOW so that I may afford to buy the next load of fuel.

On the on the hand, let’s say prices go down and they guy down the street from me just bought a load of gas at the new LOWER price. If I don’t match his price (and lose money) no one will buy my gas.


[edit on 4-5-2006 by El Tiante]

Was only a minor blip or technical selloff and by no means signals any sort of lengthy trend. I doubt anyone sees an effect on the pump prices, as Memorial day on the 29th will kick off the gas sucking travel season and will shoot up the demand and prices to record highs.

Precious metals still rose today with gold up $8 at $676.5 for June futures signaling oil's decline is only temporary.

It's so temporary it's now time to load the boat on nymex crude.



[edit on 4-5-2006 by Regenmacher]