Oil plunges to $92 in Asia on US credit fears

[Connonym]

Source: AP

Oil prices plummeted Tuesday in Asia, falling briefly below $92 a barrel as investors feared the U.S. credit crisis that brought down brokerage giant Lehman Brothers will drag on global economic growth and restrain demand for crude.

Light, sweet crude for October delivery tumbled $3.59 to $92.12 a barrel in electronic trading on the New York Mercantile Exchange midafternoon in Singapore. It briefly fell as low as $91.54. Overnight, the contract dropped $5.47 to settle at $95.71, the first time oil closed below $100 since March 4.

Read more: http://news.yahoo.com/s/ap/20080916/ap_on_bi_ge/oil_prices

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We'll see this reflected at the pumps tomorrow, right? :rofl: How come that only works when the price goes up?

[dipsydoodle]

1. How come.........

I don't think its just the oil companies to blame : there seems to be no apparent pressure on them to reduce prices. On any product that's taxed the recipients of the tax have a vested interest in keeping the prices up.

The UK is an extreme example of that. Tax and duty on diesel for cars is an aggregate 68% or so. The UK government has already accounted for tax income at high price fuel levels and hence has no interest in helping get the pump prices down again. Oil has fallen by c. 30% over the past 4 or 5 weeks but the price of diesel has dropped by only 10% max.

[Hannah Bell]

2. because of financial speculation in the futures market driving prices.

futures are down across the board. they're pulling out because 1) some investigations started, & 2) the banking crisis is stirring up the shit generally in all investments.

[dipsydoodle]

3. The how come bit

was in response to a remark in the OP.

I agree with what you've said which is a different angle. Hopefully the outcome of all this will be much tighter regulation both sides of the Atlantic.

[Hannah Bell]

9. sorry, then i misunderstood you.

[Tandalayo_Scheisskopf]

4. Spot on, Hannah.

What the present credit crisis is going to expose is the level of the premium on petroleum due to leveredged speculation in the markets. If the casino speculators can no longer get the loans to play in the markets, then the speculators bleed off, leaving the true prices behind.

[L. Coyote]

5. Another speculation bubble has burst. Who filled their pockets this time?

BIG OIL, that's who!

My at the pump price is down over 10% already.

[whistle]

6. It just might fall to $28 per barrel by election day, how's that for buying political votes

....by Big Oil?

[Connonym]

10. I never even considered that angle

damn I'm naive. Makes sense though

[bemildred]

7. It is amazing the quantity of "value" that is evaporating like a morning fog right now. nt

[hunter]

8. All those unemployed people can't by gasoline.

And guess what? Overall extraction rates still decline.

Supply vs. demand curves are only relevant if the entire market is humming along smoothly like a new car driving down the highway.

This is demand destruction of a different sort, not by price, but by market failure. The rear wheels of the economy have fallen off, and we are sliding down the highway trailing smoke and sparks.

I don't think the price of oil means anything any more. Remember in the Steinbeck's "Grapes of Wrath" how the farmers were desperately destroying stocks of oranges and potatoes to keep up prices even as people starved? It was because the market was broken. Prices were not low for any want of demand, but because the wrong people controlled the money supply, people whose economic theories were rooted in cruel ideologies and superstition.

That's where we are now.