oil is surviving Hurricane Ike

The Oct NYMEX crude oil contract closed lower at $100.18 from the close at $100.87 the day before. Normally we would be marveling at what a penny means, but this time it’s not clear that a lower low and lower close are going to survive a crashing dollar, if that’s what’s happening. The downtrend in oil is surviving Hurricane Ike, which took out only ten oil platforms this time, compared to 100 in Katrina. In short, the infrastructure is okay even if production and refining is halted, and overnight in Singapore the oil price dipped $2.28 to $98.90. Reuters reports that “crude dropped $4.28 to $96.90 barrel by 6:24 am EDT after touching a nearly seventh-month low of $96.31 a barrel. U.S. oil dropped below $100 briefly on Friday for the first time since early April, with trade open for a special session on Sunday due to Hurricane Ike.”

There’s even more militant action in Nigeria, and yet the price did not rise on the news, with fear of global recession so deep and wide that it overwhelms these normally price-positive factors. We are stunned. The price drops are across the board, too—the WSJ reports that “in other Nymex trading, heating oil futures fell 2.91 cents to $2.91 a gallon, while gasoline prices dropped 10.56 cents to $2.66 a gallon. Natural gas for October delivery rose 2.7 cents to $7.339 per 1,000 cubic feet. In London, October Brent crude fell $1.85 to $95.73 a barrel on the ICE Futures exchange.” Japan: The Nikkei didn’t trade today because of a holiday in Japan. Other Asian markets were closed, too (China, Hong Kong and S. Korea). The NKS reports that the BoJ confirmed it is in close contact with the Fed ahead of the money markets re-opening tomorrow.

Bye for Now

Barbara Rockefeller