Oil Prices - What to do?

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Oil Falls to 7-Week Low, Hovers Above $123

OIL, OIL PRICES, ENERGY, CRUDE, INVENTORIES, GASOLINE, ENERGY PRICES, EIA, OPEC, DEMAND, IRAN, HURRICANE, DOLLY
By Reuters
Reuters
| 25 Jul 2008 | 09:40 AM ET

Oil dropped almost $3 a barrel to a fresh seven-week low on Friday, extending a decline that has knocked more than $20 off prices in two weeks.

Concern high prices and the slowing U.S. economy will undermine demand have helped oil fall from a record $147.27 on July 11. Technical trading and a short-covering bounce had buoyed prices earlier.

"Potentially, there are some people selling off after a weak bounce," said Harry Tchilinguirian, oil analyst at BNP Paribas.

U.S. crude traded as low as $122.50, the lowest since June 5. Brent crude was also down.

Some analysts said oil could be headed lower still.

Jim Ritterbusch, president of Ritterbusch & Associates, said crude could drop to as low as $117 within about a week, while Barclays Capital said it expected trading within a $115-$140 range during the quarter.

Even so, concern about oil supplies given a threat this week from rebels in Nigeria to attack oil installations and relatively strong economies in some regions was expected to give oil some support.

The International Monetary Fund earlier this month slightly revised up growth forecasts in 2008 for emerging and developing economies, home to most if not all of the current growth in world oil demand.

"Nothing in the fundamental drivers has changed -- supply constraints are still with us, and the latest IMF views confirm emerging market economic growth," Tchilinguirian said.

Even after the recent price fall, oil has risen by almost 30 percent in 2008 and is up from below $20 in early 2002 due to rising demand from fast-growing economies such as China.

Oil's rally, which the OPEC exporter group has blamed on factors beyond supply and demand, has led to pressure on politicians to take action to help consumers paying higher fuel prices.

The U.S. Senate will vote on Friday on a Democratic bill that seeks to curb excessive speculation in the energy markets, but Republicans said they had the votes to block its passage.
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URL: http://www.cnbc.com/id/25839874/