Oil Prices Fall As Refineries Resume Operations

NEW YORK (AP) - Oil prices closed below $100 a barrel for the
first time in six months Monday, tumbling more than $5 as the
demise of Lehman Brothers and the sale of Merrill Lynch fed worries
about the U.S. economy and sparked another dramatic sell-off.
Crude prices have now given up virtually all their gains for the
year, extending a steep, two-month slide from record levels above
$147 a barrel.
Oil's pullback - prices tumbled as much as $7 in a special
trading session Sunday - also came as early signs suggested that
Hurricane Ike delivered less damage than feared to the Gulf Coast
energy oil and gas infrastructure.
Light, sweet crude for October delivery fell $5.47 to settle at
$95.71 a barrel on the New York Mercantile Exchange - oil's first
settlement under $100 since March 4.
The latest sell-off in oil began Sunday and accelerated Monday
as traders digested a day of dramatic upheaval on Wall Street:
Lehman Brothers Holdings Inc., a 158-year-old investment bank,
filed for bankruptcy after failing to find a buyer and Merrill
Lynch & Co. agreed to be bought out by Bank of America Corp.
Lehman, Merrill and other big institutional investors were major
participants in the commodities boom of the past year, helping push
the price of oil, precious metals and grains to historic highs
until a slowing global economy helped bring a halt to the rally.
Analysts said investors feared that the upheaval in the
financial sector could trigger another round of commodities
liquidation - especially with Lehman likely to unwind its holdings.
Other investors may also unload commodities, fearing that the
deepening economic crisis will further reduce demand for energy and
raw materials futures.
"I think this is giving the bulls further reason to exit the
market," said Stephen Schork, an oil analyst and trader in
Villanova, Pa., who said the pullback could reflect Lehman or a
hedge fund selling.
Crude has fallen more than $50 - or 35 percent - from its
all-time trading record of $147.27 reached July 11 as a global
economic slowdown continues to weigh on demand for energy.
Other commodities traded mixed, with energy futures down but
gold, silver and most grains trading higher.
Investors were also awaiting damage assessments to Gulf energy
infrastructure after Ike's passage.
U.S. officials said Sunday that Ike destroyed at least 10 oil
and gas platforms and damaged pipelines in the Gulf of Mexico. But
that represents only a small portion of the 3,800 production
platforms in the Gulf and pales in comparison to the catastrophic
damage to energy infrastructure doled out by Hurricanes Katrina and
Rita three years ago.
"Fears of widespread refinery damage have been allayed
considerably and a number of facilities are coming back up in a
timely fashion," said Jim Ritterbusch, president of energy
consultancy Ritterbusch and Associates in Galena, Ill.
Still, power outages along the Gulf Coast were slowing efforts
to restart some refineries. Meanwhile, virtually all oil production
in the Gulf and about 92 percent of natural gas output remained
shut-in as of Sunday, according to the U.S. Minerals Management
The shutdown of Gulf refineries sent wholesale gasoline prices
spiking last week and pushed pump prices back above $4 a gallon in
South Carolina, Alabama, Georgia and other states. Gasoline
shortages were reported in Maryland, Virginia and North Caroline.
On Monday, a gallon of regular rose half a penny overnight to a
new national average of $3.842 - up 16.7 cents from Friday,
according to auto club AAA, the Oil Price Information Service and
Wright Express.
Tom Kloza, publisher and chief oil analyst at the Oil Price
Information Service in Wall, N.J., said supply shortages caused by
Ike and Hurricane Gustav three weeks ago should last at least
another two weeks.
"That means we're looking at close to $4 a gallon for the rest
of September," Kloza said. "People are going to observe more of
this disconnect where retail prices move higher even though crude
oil is trading below $100 a barrel."
Also adding to the selling pressure Monday was a slightly
stronger dollar. A rising greenback encourages investors to unload
commodities bought as a hedge against inflation or weakness in the
U.S. currency.
Oil fell despite reports that militants have launched another
attack Nigeria's oil infrastructure in a third day of violence.
Associated Press Writers Louise Watt in London and Alex Kennedy
in Singapore contributed to this report.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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  • by William Location: seky on Sep 15, 2008 at 10:05 PM
    Just a little web surfing interesting links. http://www.air-inc.com/index.html http://www.youtube.com/watch?v=bZk27Lk9IzE
  • by James Location: Salyersville on Sep 15, 2008 at 07:53 PM
    Isn't it funny how a few sprinkles in the Gulf of Mexico will make the price of gasoline jump through the roof and when the sun shines again the Big Guys say there was less damage than expected to the Oil Rigs and Refineries, but the price at the pump stays up there just the same. Our fair governor uses a few words and no action to the problem. I have long heard that talk is cheap, I must say I agree with what I've heard!
  • by douglas Location: Isom on Sep 15, 2008 at 05:51 PM
    when oil prices fall why don't they lower the price of gas as fast as they raise it. kind of makes you wonder doesn't it.stuff like that ought to be looked in to
  • by All Smiles Location: Ky on Sep 15, 2008 at 01:44 PM
    Hey Lehman Brothers Holdings Inc., You thieving S.O.B.'s got what you deserved! Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha. This will trickle down to the street level thieves to!
  • by edie moore Location: wayland,ky on Sep 15, 2008 at 01:03 PM
    there is no way that gas stations should be allowed to raise the price of gasoline when a hurricane hadn't even hit yet. this is insane. we are in America not some controlled country!!! obviously somewhere along the line that all changed.
  • by Father Truth Location: Mountaintop on Sep 15, 2008 at 12:34 PM
    Oil prices dropping on the barrel record raising prices on the gallon of gas.My my what a wonderful life we live theses days.Well at least the oil companies anyways.
  • by Jay Location: KY on Sep 15, 2008 at 10:56 AM
    The oil prices may drop, but I guarantee you that the price per gallon won't be touched. I just don't understand that since the US has had numerous hurricanes over the years and this price gouging hasn't been as extreme..
  • by Jay Location: Letcher on Sep 15, 2008 at 10:34 AM
    Shame on the oil companies! Live on minimum wage and see how far your money goes. Maybe the executives will have to go thru severe weather and lose all they have. Ha Hah.
  • by Barb Location: Paintsville on Sep 15, 2008 at 10:06 AM
    I think that the gas stations were price gouging. I watched the entire storm coverage since I have family who live in the Houston area. There was no reason to limit the amount of gasoline to purchase, nor any reason to raise the price. What this tells me is that the stations thought that if they were not going to get refills on time, they would make as much as they could off of what they had in stock. That is price gouging!!! If you had a tank of gas on Thursday and were selling it for $360 gallon, why should it jump to $400 or over on Friday. There is no shortage because the storm hasen't even hit yet. I think that people should try to get by for a while, fill up and drive as little as possible, give these station a little boycott action to think about and see if it doesn't help pricing.


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