Hp GaL04 wrote:

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Oil dips below $124 on concern over US economy

By PABLO GORONDI - 1 day ago

Oil prices dropped below $124 a barrel Wednesday on the belief that record oil prices have finally cut into demand as invesetors awaited a U.S. report on inventory.

By the afternoon in Europe, light, sweet crude for July delivery was down 63 cents at $123.68 a barrel in electronic trade on the New York Mercantile Exchange. The contract fell $3.45 to settle at $124.31 a barrel in the previous day's session.

That was oil's lowest settlement price for a front-month contract on Nymex since May 15. Prices are now more than $11 below the trading record of $135.09 a barrel hit on May 22.

"The stars for a significant correction in crude oil are lining up," U.S. analyst and trader Stephen Schork said in a research note.

In London, July Brent crude dropped 84 cents to $123.74 a barrel on the ICE Futures exchange.

The Organization for Economic Cooperation and Development forecast several quarters of weak growth for most of its 30 members, which include the U.S., Japan, and several European countries, and on Wednesday cut its economic growth outlook through next year.

The Energy Deparment's Energy Information Administration releases its weekly petroleum figures Wednesday, which are expected to show an increase.

Evidence continues to mount that oil prices, nearly twice what they were a year ago, have finally cut into demand.

The latest MasterCard SpendingPulse survey found that demand for gasoline in the U.S., by far the world's biggest oil consumer, fell by 4.7 percent last week - which included the long Memorial Day holiday weekend - compared to the same week last year. Averaged over the last four weeks, demand fell 6 percent last week.

That dovetails with recent data from the Energy Department and Federal Highway Administration, as well as several other surveys suggesting high prices are cutting Americans' appetite for fuel. Swings in U.S. demand have a tremendous impact on global prices.

The decision by some countries in Asia to lower subsidies on oil products also was seen as having a bearish effect on the market.

On Wednesday, India and Malaysia joined a growing list of countries which are raising prices for fuels ranging from gasoline to cooking gas.

India announced increases which would boost gasoline prices in New Delhi, its capital, by 11 percent. Malaysia said it would hike gasoline prices by 40 percent and electricity for commercial and industrial users by 26 percent.

Indonesia and Taiwan were among nations recently to take similar steps.

The effects of high oil prices that have rippled through almost every industry continued this week.

United Airlines said Wednesday that it's cutting up to 1,100 more jobs, removing 100 fuel-guzzling airplanes from its fleet and slashing domestic capacity as it tries to cope with spiraling fuel prices.

General Motors Corp. said Tuesday it would close four truck and SUV plants in the U.S., Canada and Mexico as surging fuel prices hasten a dramatic shift to smaller vehicles.

"Investors are ... wondering if we've got to the point, with prices around $130 a barrel, if that's too much for consumers to bear," said Rachel Ziemba, an analyst at RGEMonitor.com in New York.

Also weighing on prices was the strengthening dollar, which bounced higher on Federal Reserve Chairman Ben Bernanke's comments in his speech via satellite to an international monetary conference in Spain on Tuesday.

Since last year, a series of Fed cuts designed to shore up the economy has led to a protracted decline in the dollar's value. That helped feed the record run-up in oil prices as investors bought commodities such as oil as a hedge against inflation.

But when the dollar strengthens, the effect reverses, and oil prices have begun to ease.

The dollar strenthened for a second straight day against the euro and the British pound.

Oil prices also fell on forecasts that U.S. oil and fuel supplies rose last week. Analysts polled by energy research firm Platts expect the U.S. Energy Department to report that oil inventories rose by 2.7 million barrels last week. The department's Energy Information Administration will issue its weekly inventory report later Wednesday.

In other Nymex trading, heating oil futures rose 0.61 cent to $3.6457 a gallon while gasoline prices were up 2.45 cent to $3.377 a gallon. Natural gas futures were flat at $12.221 per 1,000 cubic feet.

AP Business Writers John Wilen in New York and Thomas Hogue in Bangkok, Thailand, contributed to this story.

http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD913ADF01

I guess gas prices will start going down if we keep this shit up (good shit). Change your lifestyle, buy less gas, and if the oil companies keep the production at a faster pace like this, cheaper gas it is.

HAHA! I was waiting for that to happen.