Oil Hovers Around 8-Month Lows Near $80


Oil prices hovered around 8-month lows near $80 a barrel Thursday after the U.S. central bank balked at implementing vigorous stimulus measures to boost waning economic growth and U.S. crude stockpiles rose unexpectedly.

By early afternoon in Europe, benchmark oil for August delivery was down 92 cents to $80.53 a barrel in electronic trading on the New York Mercantile Exchange.

Earlier in the session, the contract dropped to $79.92, the lowest since October. On Wednesday, it fell $2.90 to settle at $81.45.

In London, Brent crude for August delivery was down $1.13 at $91.56 per barrel on the ICE Futures exchange.

The Federal Reserve on Wednesday extended an interest-rate reduction program known as Operation Twist, pledging to sell $267 billion of short-term Treasury bonds and buy longer-term Treasurys through December. However, traders had been hoping for a more aggressive stimulus package known as quantitative easing.

"Bears are on the cusp of smashing through the $80 level," energy trader and consultant The Schork Group said in a report. Schork said the benchmark U.S. crude could fall to $74 and Brent to $82.

A surprising jump in U.S. crude supplies also weighed on crude prices. The Energy Information Administration said oil supplies grew by 2.9 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a decrease of 600,000 barrels.

"The inventory data ... was sobering," said analysts at Commerzbank in Frankfurt, noting that U.S. crude oil stocks had reached their highest level in nearly 22 years. "Given that refinery utilization is close to a 5-year high, one would really have expected to see an inventory reduction. That this was not the case was due to significantly higher crude oil imports and increased U.S. oil production."

Crude has plunged about 25 percent from $106 early last month amid signs of slowing economic growth in the U.S., Europe and China. However, some analysts say investors are too pessimistic about global crude demand prospects.

"Oil prices at current levels are too low and a more a reflection of risk aversion rather than any significant unwinding in demand," National Australia Bank said in a report.

In other energy trading, heating oil was down 0.71 cent at $2.5775 per gallon while gasoline futures fell 2.59 cents at $2.4814 per gallon. Natural gas gained 5.1 cents at $2.568 per 1,000 cubic feet.


Alex Kennedy in Singapore contributed to this report.

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June 22 2012 at 3:00 PM Report abuse +2 rate up rate down Reply

Then why the HELL are we still paying over 3.00 a gallon. Kiss me before you screw me next time please.

June 21 2012 at 3:42 PM Report abuse rate up rate down Reply

What is going on with these prices at the pumps across America. This should be front in center why Americans are still paying over three dollars a gallon at the pump, when the prices of a barrell of oil has dip below or at 80 dollars. What is going on, this don't make sense. When the prices rise above 110, all we hear is the President is going to have a problem, and people are going to blame him for the rise in prices, but now that the prices have falling, I don't see any cable news talking about this topic. I think the President see what I see, he not only has to defeat republicans, but big money, who are trying to controll this nation and world resources, through bribery and fear. But this is 2012 and we the people are not going to allow just a few rich people anything, you see it is not about the money it is about principle if you don't believe ask Qaddify and Mumbarak and Assad and Saddam, they all wanted to rule with their wealth but the people will not allow this to happen while they struggle to pay their bills and feed their families.

June 21 2012 at 3:23 PM Report abuse -2 rate up rate down Reply

Last time I can remember a barrel of oil selling around $80 the price at the pump was $2 a gallon ! We are still being gouged by the oil companies ..BIG TIME ! They still get billions in tax breaks to boot ! Obama wants to end the breaks, Boehner just hems and haws.......yup !...must be an election year.

June 21 2012 at 2:44 PM Report abuse +3 rate up rate down Reply

If oil has dropped in price by 33%, why have gas prices here in NY on dropped about 6 - 8%?

June 21 2012 at 2:41 PM Report abuse +4 rate up rate down Reply
1 reply to Hank's comment

Answer: Because autos and trucks don't run on crude.

June 21 2012 at 3:46 PM Report abuse -2 rate up rate down Reply

We'll continue to get forked without a kiss no matter how far it drops. When you have our trusty Congressional leaders in your hip pocket you're allowed to do that. How else would you get reelected? Those BIG campaign bucks gotta come from somewhere.

June 21 2012 at 2:07 PM Report abuse +3 rate up rate down Reply

It all amounts to GREED " that all BullSh.. story of supply and demaned that s just what it is BullSh.. we have more oil in the U.S. so much that we EXPORT it. Or like what rfeak59288 and podunkproductions said the price will go up. You will never see the day when the price at the pump will fall as the price of oil goes down. that my friends are the GREEDY station owners fault. Because if they can keep the price of gas at a higher price and people pay it why lower it. If you don't believe it ride around and see all the differant prices at thec stations.

June 21 2012 at 2:04 PM Report abuse +4 rate up rate down Reply

Don't worry, as soon as the King of Saudia Arabia gets a bad case of hemorrhoids, the price of oil and gas will shoot back up!

June 21 2012 at 1:36 PM Report abuse +1 rate up rate down Reply

The only question I have is now that oil is down to $80/barrel Why has has the price of gas only come down a few cents. When gas was $2.00/ gallon the price of oil was $78/barrel. If the price of oilhad gone up in the same proportion as the drop in price we would be paying $5.00/gallon. I truly believe before it's all said and done Obama will take credit for this. The price has dropped because conservation and an extremely warm winter in the northeast has caused a glut in supplies.

June 21 2012 at 1:33 PM Report abuse +3 rate up rate down Reply
Phillip De Prato

Let's face it. We have a rotten economy that is driven primarily by the price of oil since it affects the cost of producing nearly all products and delivery of them then it affects us, the consumers, that spend more to travel to work or shopping yet oil is a commodity that costs pennies a gallon(if not a barrel) to obtain and only a few cents more to refine. After adding taxes on you still are not near the dollar mark but just assume it is a dollar. Gas here today where I am is $3.79. That means $2.79 is being tacked on for mostly profit. Now, I can remember before Bush came along sometimes only paying $.79 cents a gallon and you can bet the oil companies were doing just fine since none of them were shutting down yet we were enjoying a great economy. You can blame everything and everybody until you're blue in the face about this sour economy BUT as for me, I blame artificial pricing of oil and secondarily those that are lining thier pockets at our misfortune to the extent we cannot find enough work are even persue the happiness that our constitution says we can.

June 21 2012 at 1:29 PM Report abuse +7 rate up rate down Reply