to the market.......so where's the
Drill Baby Drill Talk NOW??????
Oil falls as housing market totters
Weak reports on new home sales and rising job losses continue to weigh on crude prices.
Oil falls as housing market totters, economy weakens - Jan. 29, 2009
NEW YORK (CNNMoney.com) -- Oil prices sank Thursday as a sour housing market signaled that demand would continue to remain low as the economic crisis rolls on.
U.S. crude for March delivery ended the day down 72 cents to settle at $41.44 a barrel in New York.
Sales of new homes sank to their lowest level on record in December, according to a Thursday report from the Census Bureau, which has been collecting new home sales statistics since 1963.
A collapse in the nation's housing market was one of the main drivers behind the sluggish economy that quelled oil demand last summer and sent crude prices tumbling more than $100 a barrel from a record high of $147.27 a barrel.
A sinking job market is also weighing on the economy, said Tom Orr, head of research for brokerage Weeden & Co.
Since the beginning of the week, companies have announced they would cut more than 100,000 jobs in 2009 as they try to cut costs and stay afloat. On Thursday, the Labor Department reported record numbers of citizens receiving unemployment benefits, which rose to a record high for the week ended Jan. 17.
Orr expects the combination of factors to pressure oil prices for some time. "I can't see a case whereby you could get a recovery this year," he said.
Supplies: The downturn in demand has led to growing stockpiles of unused crude, which means that refiners are disinclined to purchase new barrels on the open market.
"The supply just isn't getting worked out as quickly as people had thought," said Orr.
On Wednesday the government said supplies of excess crude rose by 6.2 million barrels in the week ended Jan. 26. Analysts were looking for an increase of 3.4 million barrels, according to a poll by research firm Platts.
The Organization of Petroleum Exporting Countries, whose members produce about 40% of the world's oil, has been struggling to meet a production cut of 2.2 million barrels a day in January in order to boost prices in an oversupplied market.
OPEC is known for routinely falling short on pledged production cuts, and analysts worry it may not be able to cut the entire promised amount.
Industry: Plummeting prices have even started to affect oil-company balance sheets. When prices rose last summer, those same companies posted record profits.
Royal Dutch Shell (RDS) reported a 28% drop in quarterly profits Thursday, and several weeks ago, ConocoPhillips (COP, Fortune 500) said it would try to cope with plummeting prices by cutting about 4% of its global workforce.
And when Exxon Mobil (XOM, Fortune 500), the world's biggest publicly traded oil company, reports fourth-quarter earnings Friday, it's expected to show about a 40% drop in revenue.
Stimulus: Oil investors are looking to the Obama administration and Congress for guidance after the House of Representatives passed an $819 billion stimulus bill to bolster the economy.
The oil and energy industries have high hopes for the plan, according to a poll of public and private professionals from Platts.
"More than 70% of our respondents said they expect regulators to flex some muscle to make sure energy markets don't suffer the same breakdowns we saw in financial markets," Platts editorial director Bill Loveless said in a statement.
In its current form, the plan has the Energy Department distributing grants and loan guarantees, according to Loveless. The bill still faces a vote in the Senate.
Gasoline: The price of gasoline at the pump ticked up 0.1 cent to a national average of $1.843 a gallon from the day before, according to a daily survey from motorist group AAA. To top of page
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