Oil Prices Fall Below $40 Again

**drgnfly3030** · February 9th, 2009, 04:32 PM

Oil prices fall despite OPEC project postponements
By CHRIS KAHN, AP Energy Writer
13 mins ago

NEW YORK – Oil closed below $40 a barrel for the first time in about three weeks as another round of poor company earnings and job cuts overshadowed an OPEC announcement Monday that dozens of production projects were being tabled.

Light, sweet crude for March delivery fell 61 cents to settle at $39.56 a barrel on the New York Mercantile Exchange. Oil prices jumped earlier in the day to $42.43 as OPEC Secretary General Abdalla el-Badri's announced that the cartel would postpone 35 of 150 new oil and gas projects.

el-Badri said the group would likely fall short of its goal to raise production capacity by five million barrels per day by 2012, according to a research note by analyst Addison Armstrong. The OPEC secretary also said the cartel is close to completing its previously announced cut of 4.2 million barrels per day.

Crude producers have been hit hard by falling prices, but industry experts warn that taking production projects off line is short-term thinking.

"They're only hurting themselves," said Phil Flynn, an analyst at Alaron Trading Corp.

Any spike in crude prices because of production declines from the Organization of the Petroleum Exporting Countries will make it harder for economies to recover and for demand to pick up naturally, Flynn said.

"And when demand picks up, they won't have the production capacity to meet it," he said.

OPEC produces about 40 percent of the world's crude oil.

Despite OPEC's announcement, oil prices dropped back to below $40 by midday. Oil traders and brokers have come to terms with the new state of the oil industry after a frenetic 2008 in which prices spiked above $147 a barrel, then crashed to close $30.

They've digested the massive jobless numbers from the government, the rounds of corporate retrenchment, and the bloated crude inventory numbers. In the past week, traders have come to a rough consensus of what a barrel of crude is worth, analyst Peter Beutel said.

"We've reached an equilibrium point," Beutel said. "They're willing to trade below $40, but by the end of the day, there's always enough bidding to push it back above that level."

Evidence that energy demand will remain depressed for some time continued to roll in Monday.

Nissan forecast its first annual loss in nine years and said it will slash 20,000 jobs from its work force. Chief Executive Carlos Ghosn blamed the car maker's loss on the global economic slump and the appreciating yen.

Menswear chain S&K Famous Brands, which operates 135 stores in the East and Midwest, announced it is filing for Chapter 11 bankruptcy protection. And Hasbro Inc. said its fourth-quarter profit fell 30 percent.

Meanwhile, home appliance maker Whirlpool Corp. said fourth-quarter profit dropped 77 percent, and Barclay's PLC warned that further asset write-downs — on top of the massive $11.9 billion booked for 2008 — were likely. Britain's third-largest bank also said executive directors would not be getting any bonuses.

Oil, which is traded in dollars, also was given a boost as the dollar fell against European currencies.

Traders on Nymex are watching what happens with a $700 billion financial rescue program in Washington.

The Treasury Department also is considering steps to broaden the use of a new lending facility at the Federal Reserve, provide government guarantees to help banks deal with their troubled assets, and continue direct infusions of capital into banks in exchange for securities and tougher accountability rules.

So-called toxic assets — securities for which markets have dried up, making them impossible to value — have been weighing on banks' balance sheets, preventing them from lending to the wider economy and stifling economic recovery. Experts hope the Treasury's plan to manage these bad assets would brighten the outlook for the U.S., the world's largest oil consumer.

The national retail average price for a gallon of regular gas climbed 0.3 cents to $1.924 a gallon overnight, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 13 cents a gallon above what it was a month ago, but about $2.29 below last July when prices peaked at $4.11 per gallon.

In other Nymex trading, gasoline futures dropped 3.6 cents to settle at $1.2471 a gallon. Heating oil lost less than a penny to settle at $1.3523 a gallon, while natural gas for March delivery rose 3.3 cents to settle at $4.807 per 1,000 cubic feet.

In London, the March Brent contract fell 19 cents to settle at $46.02 on the ICE Futures exchange.

***So someone please tell me why gas it $1.93 in BSG???***

**PVVikeFan** · February 9th, 2009, 05:20 PM

But gas prices just went up again today. What's up with that ????

**drgnfly3030** · February 9th, 2009, 05:36 PM

Exactly! I about freaked out when I drove by the black diamond! It's still 1.88 next to KFC though. I'm so glad I filled up at 1.79 in Pennington yesterday.

**steer** · February 9th, 2009, 05:52 PM

for as far as I can remember.. Pound has always been higher, and the Chevron right down the road, was actually cheaper than Wise prices..
weird times indeed

**drgnfly3030** · February 9th, 2009, 06:09 PM

Yeah usually Pennington Gap is more expensive than Big Stone but they've been running cheaper since gas came back down. The words price gouging come to mind, especially with it being 1.93.

**1inStripes** · February 9th, 2009, 06:19 PM

Filled up at Food City before I came in at work in Wise and the price on the sign said 1.93. Thought I had messed up by not buying in Duffield at a 1.88. When I actually got to the pump, they were still priced at a 1.88.