Oil Hovers Above $51
Oil held above $51 on Wednesday after falling more than 3 % the previous session to the lowest level in 20 months, but investors were wary about taking short positions that would test the psychologically key $50 mark.
U.S. crude futures for February rose 19 cents to $51.40 per barrel.
Prices touched $50.53 on Tuesday, the lowest level since May 26, 2005, after Saudi Arabia said OPEC production cuts were working well and there was no need for an emergency meeting of the producer group.
The market is quite nervous about taking positions after seeing so many days of sharp drops in oil prices. Many are getting out of the market and cutting their losses.
The market is also a little reluctant to take a short position because they are not sure if prices would actually fall below the psychologically important $50 line.
Oil prices have fallen around 16 % so far this year, in part due to warm weather in the U.S. Northeast, the world's top heating oil market.
We expect prices to drop further as the market remained strongly oversupplied and demand stayed weak.
Prices spiked in 2005 and 2006 because of large amounts of speculative funds flowing into the market. But many investors are now looking at the fundamentals of demand and supply, instead of pure speculation. That's why prices have fallen sharply and will fall further.
As colder weather reached the region, heating demand in the U.S. Northeast was forecast to rise above average early in the week, with Wednesday demand well above usual.
But the coming of the cold was a little too late to radically change the recent fundamentals.
U.S. crude futures for February rose 19 cents to $51.40 per barrel.
Prices touched $50.53 on Tuesday, the lowest level since May 26, 2005, after Saudi Arabia said OPEC production cuts were working well and there was no need for an emergency meeting of the producer group.
The market is quite nervous about taking positions after seeing so many days of sharp drops in oil prices. Many are getting out of the market and cutting their losses.
The market is also a little reluctant to take a short position because they are not sure if prices would actually fall below the psychologically important $50 line.
Oil prices have fallen around 16 % so far this year, in part due to warm weather in the U.S. Northeast, the world's top heating oil market.
We expect prices to drop further as the market remained strongly oversupplied and demand stayed weak.
Prices spiked in 2005 and 2006 because of large amounts of speculative funds flowing into the market. But many investors are now looking at the fundamentals of demand and supply, instead of pure speculation. That's why prices have fallen sharply and will fall further.
As colder weather reached the region, heating demand in the U.S. Northeast was forecast to rise above average early in the week, with Wednesday demand well above usual.
But the coming of the cold was a little too late to radically change the recent fundamentals.
posted by Ottawa Gas Prices | 7:53 PM
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