October 13, 2008
Oil prices fall again, down $10 in 2-day erratic sell-off
NEW YORK - Oil prices settled sharply lower for the second day in a row yesterday, leaving crude more than $10 cheaper in just two days of frenzied trading and prompting speculation that the hard-charging market may be running out of steam.
Light sweet crude for August delivery fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, after earlier sinking as low as $132. The drop follows a $6.44 sell-off Tuesday, crude's biggest since the Gulf War.
The two-day slide of $10.58 a barrel marks a dramatic turnaround in crude prices, which as recently as Friday traded at record highs above $147 a barrel. But even with this week's sell-off, prices remain about 80 percent above where they were a year ago and up about 40 percent from the start of the year.
Analysts are unsure whether the drop represents a long-term shift in sentiment or simply a brief correction to crude's monthslong bull run. But the dizzying decline is prompting market veterans to ask how much support remains for such high prices.
"It's a sign that maybe the bull market is losing strength," said Michael Lynch, president of Strategic Energy & Economic Research Inc.
Perhaps just as significant as the declines was the sudden increase in volatility. Prices whipsawed by more than $10 Tuesday and $7 yesterday ahead of the expiration of options contracts this week.
"I think anyone you talk to would have to be surprised by the magnitude of these huge price swings. This is extreme price volatility that no one can predict," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. Such large up-and-down swings, he added, can indicate the market is nearing its top.
Sharply increased crude and gasoline supplies were the immediate cause of yesterday's decline.
The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1 percent, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm Platts expected. Gasoline supplies also leapt unexpectedly.
"The numbers were decidedly bearish on just about all fronts," Ritterbusch said.
Industry observers cautioned that prices could still bounce back, just as they have after large drops in recent weeks.
"I do expect this bubble to burst. Is this it? It might be ... but I'm not ready to say so yet," analyst and trader Stephen Schork said.
Get home delivery of The Sun and save over 50% off the newsstand price
Copyright © 2008, The Baltimore Sun
 Fatal medevac crashFour people died and another was seriously injured when a medevac helicopter crashed in a Prince George's County park. Photos Archived coverage: Ex-councilman Harris killed | Md. police spying City Hall, Dixon investigated | CEG sold for $4.7B  A roundup of crimes reported in Baltimore City and Baltimore County |
Popular stories: Maryland News
- 3 wounded in violent attack outside hotel
- Pit bull attack breaks calm
- Bringing back power
- Two shot, one stabbed outside Belvedere Hotel
- Peter Hermann: Witness to a crime may be told it never happened
Watchdog archive
Is there something in your neighborhood that's not getting fixed? Tell us where the problem is and how long its been there.
 Area farmers' marketsAn interactive map featuring locations, times, photos and other coverage of farmers' markets across the area. |
 | |
My MarylandSubmit photos from around the state and view those from other readers Also see: Charm Cityscapes | |