Oil Prices Hit 8-Month Low as Spain Optimism Fades

Oil PricesBy PABLO GORONDI


The price of oil hovered above $82 a barrel Tuesday after touching an eight-month low near $81 earlier in the session amid concern Spain's bank bailout won't be enough to stem Europe's debt crisis and suggestions OPEC could boost production targets.

By early afternoon in Europe, benchmark oil for July delivery was down 24 cents to $82.46 per barrel in electronic trading on the New York Mercantile Exchange. Earlier on Tuesday, oil dropped to $81.07, the lowest since October, having dropped $1.40 on Monday.

In London, Brent crude for July delivery was down 72 cents at $97.37 per barrel on the ICE Futures exchange.

Crude jumped temporarily on Monday after the 17 countries that use the euro common currency pledged to lend Spain $125 billion to rescue its faltering banks. However, attention soon turned to the Greek election this weekend, the outcome of which could determine if Greece stays in the euro.

"There are highly uncertain and fragile economic conditions across the eurozone that dominate the markets and cause nervous trading and volatility," said analysts at Sucden Financial in London.

Oil has plunged about 24% from $106 since early last month amid signs of slowing economic growth in the U.S., China and Europe.

Traders will also closely watch a quarterly meeting of the Organization of Petroleum Exporting Countries in Vienna on Thursday. Some members of the cartel have suggested recently that OPEC is producing too much crude, and the group could decide to cut supplies to help boost prices.

An OPEC report showing oil output at its highest in the last four years is sure to be used by price hawks such as Iran and Venezuela. The monthly report, published Tuesday, showed OPEC production just short of 33 million barrels a day. That's almost 3 million barrels more than the organization's overall quota and more than 630,000 barrels above the May figure.

The report said it expected world demand this year to increase by 0.9 million barrels a day while saying at the same time that economic uncertainty might upend that prediction and lead to "a further decline in world oil demand."

Saudi Oil Minister Ali al-Naimi, however, said OPEC needed to raise its production target of 30 million barrels a day.

Al-Naimi's remarks indicate "that the world's leading oil supplier has no intention of cutting back on production despite recently lower prices and an apparent oversupply in the market," said a report from JBC Energy in Vienna.

"If production remains at its current level, the global oil market risks seeing a supply surplus of well in excess of 1 million barrels per day in the second half of the year, which would exert further pressure on the oil prices," said analysts at Commerzbank in Frankfurt.

In other energy trading, heating oil was unchanged at $2.6357 per gallon while gasoline futures fell 1.13 cents to $2.6453 per gallon. Natural gas lost 1.4 cents to $2.204 per 1,000 cubic feet.

___

Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Add a Comment

*0 / 3000 Character Maximum

88 Comments

Filter by:
jasonpoynter

Amazing how oil barrels are down to 82 bucks, but yet the pumps just bounced from 3.45 to 3.75 Tuesday. The oil companies keep making billions, while the middle class gets driving into poverty. The last time it was in the 80's mark, we were paying 2.80 a gallon or less. At least the Fat Cats in Washington are still high on the hog

June 13 2012 at 3:19 PM Report abuse rate up rate down Reply
wapitibowhunters

The Saudi's are pumping all they can. trying to help their Muslim Brother get re-elected in the US. In return he took the santcions off Iran.

June 13 2012 at 9:25 AM Report abuse rate up rate down Reply
yvcarudnj

OPEC....thank you Dr. Kissinger for creating this cartel.....thank you very much...

June 13 2012 at 8:31 AM Report abuse rate up rate down Reply
Richard

Solution - term limits for all in Congress. If they won't follow the will of the people - OUT. What we have now is (for the most part) a bunch of no balls puppets bought and paid for by the military/industrial conmplex.

June 13 2012 at 8:22 AM Report abuse rate up rate down Reply
1 reply to Richard's comment
yvcarudnj

I agree, and I would add one term limit and when they leave their health benefits are terminated.

June 13 2012 at 8:33 AM Report abuse rate up rate down Reply
Bill

Gas prices go down, grocery prices go up. It's just the speculators moving their money around but we still get screwed either way.

June 13 2012 at 6:40 AM Report abuse rate up rate down Reply
goodgrief61945

Gas prises are rising adain in Columbus, Ohio. No bic surprise there! BP and Exxon, have to make thier billions, regardless of the price of oil.

June 13 2012 at 12:20 AM Report abuse rate up rate down Reply
lockworks07

Screw gasoline!

June 12 2012 at 9:44 PM Report abuse rate up rate down Reply
psridgell

Did you know that $1.17 of the cost of a gallon of gas is due the enviromental blends the refineries haved to adhere to, so whiny liberals won't die. In most states gas taxes combined with federal taxes are over $.50 cents. So before you get started making money at the oil companies, half of your cost per gallon is taxes and enviromental blends.

June 12 2012 at 9:29 PM Report abuse rate up rate down Reply
chris

Yet gas prices are up...Thanks Commander in Chief. And oh by the way before you libs get on me. When gas prices were up you libs were ready to hang G.W,

June 12 2012 at 9:26 PM Report abuse rate up rate down Reply
1 reply to chris's comment
yvcarudnj

Commander in Chief...are you talking about Bush Jr. when he came to office he was left with a surplus
of half a trillion dollars by a liberal Commander in Chief and when Bush Jr. left he left the new Commander in Chief with a 5.6 Trillion dollar deficit...that actually means he pissed away 6 Trillion dollars and now the right wingers are complaning about the deficit being in double digit trillions....how quickly righties forget when it suits them....and PS the present Commander in Chief saved this country's ass even with the party of NO in control...

June 13 2012 at 8:41 AM Report abuse rate up rate down Reply
paulie

Amazing all of the scare tactics that the dirt bag manipulators have been doing,... OH that's right ! there is a shortage or whatever they want people to believe YET !! GAS IS WHAT LIKE .33 cents a gallon in venezuela, and .13 cents a gallon in saudi arabia, WOW ! The greatest nation on earth and we get hosed,... isn't it great living in the USA , I mean USSR, I mean USA,.... WOW , I can't tell the difference anymore,.....

June 12 2012 at 8:51 PM Report abuse +1 rate up rate down Reply