How Will Oil Be Traded? Maybe Not in U.S. Dollars

A growing number of nations are negotiating to drop the use of the U.S. dollar as the currency used to trade oil, which originally would be replaced by a basketfull of currencies, and over the long haul an as yet undetermined currency.

Inluded in the countries currently negotiating are France, the Arab states, Japan, China, Russia, and Brazil. India may eventually get on board as well, making it a considerable force in the future. Goals are to make the change from trading oil in U.S. dollars to a basket of currencies by 2018.

Nations understand the extraordinary and misguided practices and policies of the U.S. government and the way it has spent money to bailout the numerous industries they refuse to allow to fail, and the amazing size of the debt incurred to do it.

All this means the U.S. dollar will continue to fall in value as the printing of money continues from the Federal Reserve.

America will find itself struggling to maintain its economic dominance as a result, and there's literally nothing that can be done about it unless the horrid economic policies are abandoned and the political will is there to make it happen.

It's doubtful that will happen any time soon, and so we'll probably have to go through a lot more pain before America and its politicians abandon the economic path they're traveling and return to financial sanity.

Weak Economy Continues to Put Downward Pressure on Oil Prices

Prices for oil dropped to near $60 a barrel Thursday, the lowest level in close to a year and a half.

With growing consensus showing we will be in for a long economic downturn, consumers are cutting back on everything but buying necessities, drying up oil demand.

The obvious effect of this is also to push gas prices down with oil, and that has many experts saying that could result in gas falling to $2 a gallon by the end of 2008. The AAA says overnight gas prices fell to $2.34 a gallon on average.

In just the last month average prices of gasoline have declined by close to 33 percent in the U.S.

Oil for December delivery settled at $60.77 a barrel on the New York Mercantile Exchange, a drop of $4.53 or 7 percent.

Brent Crude on the ICE Futures exchange in London fell $4.44, to settle at $57.43 for December delivery.

Oil Prices Will Continue to Fall

There's no question that the trend for oil prices has changed, and for a period of time we'll see that trend continue down.

A major reason I believe this will happen is the nature of trends themselves; it simply takes time for a trend to stop and turn itself around. The reason it takes time is because a trend is simply the response of human beings to a situation, and most human beings are slow to catch on and change.

In other words, people will neglect the underlying fundamentals at times of emotional turbulence and simply follow the crowd. Many times they do it as "bulls" and other times they do it as "bears." We are seeing the bears rear their heads in oil now, and that isn't going to stop in the short term.

While we know over a period of time that demand will start to surge again, as American consumers start to increase their driving again, and emerging market giants like China and India increase their acquisition of oil, and other commodities as well, we also know that they're cutting back on buying now, and that slowdown should continue.

One factor that could slow down this trend is if OPEC slashes production so much that it drives the cost of oil artificially above its market price. That could happen next month when they get together in an unprecedented emergency session to decide on what to do with the oil price drop.

We very well could see oil prices plunge much further before they begin their inevitable climb back up. Much of that will be determined by how long the fear factor reminds in the psyche of consumers, which has caused them to lower their consumption practices.

Oil Plunges to 13-month Low on Demand Concerns

Concerns over the global economy continues to pummel oil prices, as it dropped to a 13-month low below $71 a barrel early Wednesday. Demand continues to shrink as consumers cut back on spending.

Most of this is based on the biggest oil consumer in the world, the U.S., where demand continues to diminish over the financial crisis.

November delivery for Brent North Sea crude fell to $70.70 a barrel, a $3.6 drop from Tuesday's close.

Delivery for November light sweet crude in New York also experienced a significant drop, falling as low as $74.93 a barrel, before recovering to $75.23 a barrel.

OPEC, which has taken the unusual step of meeting a month before their scheduled December meeting, has cut back its 2009 estimate for demand, citing the continuing economic climate in the U.S.

On Thursday there'll be an update on where U.S energy inventory stand, which will give a clearer picture on how the demand factor is playing out in the country.

Oil Falls Over $9 to End at 13-month Low on Friday

Oil prices plummeted to a 13-month low Friday, following ongoing dramatic stock market losses, as investors fear that the anemic global economy is having negative impact of fuel demand.

Crude for November delivery in the U.S. plunged $9.21 to $77.38 a barrel, the lowest its been since September 11 2007 when it hit a mid-day low of $77.

The Dow Jones industrials lost 128 points Friday, as it limped to the end of the wild session where it traded in a range of 1019 points during the day.

As economic concern drives people to tighten up their wallets, demand for oil continues to drop, as in the U.S. last week supplies increased by 8.1 million barrels, indicating people are cutting back on usage.

OPEC nations are starting to go into panic mode as well, calling an emergency session on November 18, a month before the regularly scheduled meeting.

It is expected they are going to decide to cut back on production in order to shore up prices, but that will be futile as problems are much bigger than they can affect.

The U.S. government and others will soon find out that they need to quit interfering in all markets and let them take care of what they know how to do. The market after all consists of people and businesses in their enormous number of interactions during this period of time; they'll know how to best respond to the government-induced financial crisis.

According to AAA, the average gas price per gallon in the U.S. is now at $3.35 a gallon.

Economic Fears Spread to Europe as Oil Continues to Tumble

Oil continues its nosedive as demand continues to slacken in response to economic fears spreading in Europe.

Oil consumption in the U.S. fell by 7.1 percent over the last four weeks in contrast to last year during the same time. Use is now at about 19 million barrels a day in the U.S.

Crude had dropped as low as $87.56 a barrel in the afternoon, while settling at $87.80 for November delivery of light sweet crude. That was a fall of $6.07 for the day.

Brent North Sea crude also fell significantly, settling at $83.68 a barrel for November delivery, dropping $6.57 for the session.

The lagging participation of the European economy in the economic downturn is now over, and what has happened in the U.S. is now emerging in Europe. That has also caused the U.S. dollar to strengthen significantly against the euro, while also causing gold to be held back for now as a safe haven.

For oil, the new world of bailouts and economic fears leaves it in a place of probable continued decline in price as demand slows around the globe. India and China demand will slow as well, with China now exporting some gasoline because of slow domestic demand.

As far as the U.S. bailout by the government, it didn't do much to placate investors, as they have started to pour their money into short-term dollar-denominated financial instruments like U.S. Treasuries.

Oil Prices Continue to Drop as U.S. Demand Slackens

While the price of oil fluctuated significantly today, by the end of the day it settled more toward the lower end, ending at $98.53 for November delivery on the New York Mercantile Exchange (NYMEX). Prices continue to influence the amount Americans are willing to drive, affecting the overall demand.

Prices for the day went from a low of $95.95 a barrel to as high as $102.84.

For the week ending September 26, crude stock rose 1.5 percent by 4.3 million barrels, reaching 294.5 million barrels overall. That was close to three times what some analysts expected.

As far as gasoline inventories go, they rose to 900,000 barrels to 179.6 million barrels. Analysts were looking for a drop of 1 million to 3 million barrels.

Much of the discrepancy comes from the quick turnaround of U.S. refineries after the hurricane damage, along with the decreasing amount of miles consumers are traveling.

On the ICE Futures exchange in London, delivery for Novemeber Brent crude dropped by $2.84 to settle at $95.33 a barrel.

Oil Prices Fluctuate on Demand and Economic Concerns

Uncertainty is the word floating around concerning oil prices, as investors await the decision concerning the government bailout plan, the decreasing demand for oil, and the time it will take to bring platforms and rigs back to production from recent storms.

Other factors in the mix are the cut in production announced by OPEC earlier in September, as well as the continued threat to Nigerian oil procution by regional terrorists.

The potentially serious consequences on the value of the dollar from the ill-advised financial bailout is also on the minds of oil investors going forward.

Fear and uncertainty keep oil and other commodities in an unpredictable mode. We'll see continued fluctuation in prices going forward until things settle down. Early morning trading on the NYMEX had November deliver for sweet crude dropping to $105.57, although they continue to move up and down from positive to negative territory.

Light Sweet Crude Oil in big $6.01 Increase

Investors continued to move their money out of equities and put it in commodities, as oil was a beneficiary of the recent economic bad news which has hammered the financial companies. AIG was the main culprit today in moving commodities up.

October delivery for light sweet crude in New York surged by $6.01 dollars to finish the session at $97.16.

Across the pond Brent North Sea crude also moved upward by $5.62 to end at $94.84.

The U.S Department of Energy says that over the last month oil-based product use has fallen by 4.4 percent over the same time last year.

Recent bad weather has also caused a drop of 6.3 million barrels in the U.S reserves.

Even with the gain today, prices have dropped by $55 a barrel since the July 11 high of $147 a barrel.

Oil News Around the Web

Big government, not Big Oil, is the big problem

Every time you fill up your 16-gallon gasoline tank, records suggest that companies like Exxon Mobil Corp. profit about $1.44 from your purchase. However, at the same time, from that same fill-up, the federal government receives $2.94, and Trenton pockets $2.32. The government is taking more than three times as much as the oil companies, and there's movement to add even more.

=====

Oil Futures Climb as Dollar Slides

U.S. crude oil prices closed more than $2 higher Friday, as the third straight drop in U.S. payrolls pushed the dollar down, drawing investors into commodities.

=====

Oil Rebounds After Decline

Crude oil futures rebounded this Friday in Bangkok, Thailand. The futures fell by $1 last night but the dollar stabilized, encouraging investors to sell. Previously, investors had been buying crude as a hedge against inflation.

=====

Oil prices spike near 106 dollars as US currency slides
Oil prices jumped close to 106 dollars on Friday as investor sentiment was driven by the weak US dollar, tight energy supplies and more bad news on the US economy, analysts said.

=====

South Texas Oil Company to Present at IPAA OGIS Small Cap Conference
South Texas Oil Company today announced that it will be a presenting company at the Independent Petroleum Association of America's (IPAA) Oil & Gas Investment Symposium in New York.

=====

Oil jumps as investors pour money back into commodities amid interest rate talk

Oil jumped as investors poured money back into commodities on expectations of an interest rate cut in the United States and in hope that raw materials will provide them with a useful hedge against wider market weakness.

=====

Venezuela's Congress OKs "windfall" oil tax

Venezuela's Congress on Thursday gave initial approval to a windfall oil tax that extends leftist President Hugo Chavez's campaign to increase government revenue from the OPEC nation's oil industry.

=====

Big Oil on the Grill

Energy companies are becoming progressively more vital to the maintenance of our modern lifestyle. That very fact renders them crucial for inclusion in virtually any portfolio.

=====

Congress Shifts Attention to Oil Executives, Gas Prices

In what I believe is an attempt to simply assign blame and get the attention of the public away from their dissatisfaction with Congress and their poor performance, Representatives made a big show of "grilling" oil company executives about the profits the companies have made.

Liberal Rep. Ed Markey from Massachusetts wants to take away about $18 billion in tax breaks from the five largest U.S. oil companies and put them toward what he calls "planet-friendly energy alternatives like wind and solar."

That's all we'd need is those ugly forests of windmills strewn around the countryside, which don't supply enough electricity to help much at all.

As Peter Robertson, vice chairman of Chevron, said, "Given that the largest contributor to the cost of gasoline is crude oil, this has translated into record-high gasoline prices."

The other thing Congress doesn't talk about is the high taxes on gasoline of an average of 47 cents a gallon; including state and federal taxes combined. That average is as of the first quarter of 2008.

In the end this is just a media circus to get people to start blaming business again, and get the attention of the politicians.

Crude Oil in New York Falls for Fourth Day in a Row

With the drop in crude oil prices for the fourth day in a row in New York, it has caused speculation that the continually slowing U.S. economy will cause less demand for oil and result in growing reserves.

The strengthening of the U.S. dollar has also caused investors to move some of their money out of commodities, as its use as an inflation hedge is looked upon as over - at least for now.

"The sharp fall in commodities has prompted investors to reassess their investments," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "The perception is that the U.S. dollar has somewhat shifted and begs the question whether commodities are a good investment hedge."

On the NYMEX, oil fell as low as $99.66 a barrel in after-hours trading; about 1.2 percent overall. Since March 17, oil has plunged by 11 percent from the record $111.80 a barrel it reached at that time.

Brent crude for May fell to $99.07 a barrel, or 79 cents on London's ICE Futures Europe exchange. That's down from the $99.86 it finished at yesterday; the first time since March 4 it fell ended the session below $100 a barrel.

Oil Prices drop below $100 a Barrel

The ups and downs of commodities, the U.S. dollar, and the oil market continue, as oil futures dropped below $100 a barrel today, making it a plunge of about 10 percent since it hit record highs of $111.80 a barrel on Monday.

Light sweet crude for New York oil in May fell to $99.20 a barrel, while London's Brent North Sea crude dropped by $2.50, to end at $98.42 a barrel.

"Crude fell below 100 dollars a barrel as fears of a US recession, its impact on the rest of the world, and on oil demand growth continue to dominate headlines," said Sucden analyst Michael Davies on Thursday.

Much of the ups and downs comes from the declining U.S. dollar, which commodities are denominated in. The strength of foreign currencies provides cheaper buy-in for investors.

As far as available reserves in the U.S., the US Energy Information Administration (EIA) said for the week ending March 14, they increased by 200,000 barrels, to bring the total to 311.8 million barrels. That's the typical amount for this time of year, although the market thought it would rise to about 2.3 million barrels.

The banking and credit problems are seen as another key contributor to the price decline in oil, which could potential slow global growth down significantly.

It's going to take some time for this to all work itself out, as so many variables are floating around out there. Until those things settle down, the price of oil won't, neither will a lot of other commodities.