Crude has a huge fall

Crude prices fall as traders speculate about slowing energy demand

Crude oil futures finished considerably lower today after stock market continued to to affected from mortgage problems. Traders speculated that economic expansion might slowdown leading to reduced energy demand.

For the day ending Thursday, 16 August, 2007 crude-oil futures for light sweet crude for September delivery closed at $71.00/barrel (lower by $2.33/barrel or 3.1%) on the New York Mercantile Exchange.

Brent crude oil for September settlement fell $2.22 (3.1%) to $69.42 on the ICE Futures exchange in London.

Yesterday, as per this week’s weekly inventory report by the Energy Department, crude oil supplies fell 5.2 million barrels to 335.2 million barrels in the week ending 10 August. Gasoline stocks declined 1.1 million barrels to 201.9 million barrels, while distillate stocks rose by 200,000 barrels to 127.7 million barrels. Refineries operated at 91.8% of their operable capacity last week.

Erin weakens but Dean still a threat

Natural gas in New York was little changed today as the weekly report showed inventories remained above the five-year average and Hurricane Dean might bypass key production areas in the Gulf of Mexico.

U.S. inventories of natural gas increased 21 billion cubic feet last week to 2.9 trillion cubic feet, leaving supplies 15% above the five- year average for this time of year. Gas for September delivery rose 1.1 cents (0.2%) to $6.875 per million British thermal units.

Against this backdrop, September reformulated gasoline fell 3.05 cents at 1.9783 a gallon and September heating oil shed 4.40 cents to end at $1.9829 a gallon.

Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. Crude oil prices are also higher because of concern that shipments from Iran, Nigeria and Iraq may be disrupted. OPEC is scheduled to meet at Vienna on 11 September, 2007 for their next meeting.

As of latest reports, tropical storm Erin has weakened to a tropical depression. But Tropical storm Dean was upgraded to Atlantic hurricane Dean and continued to be a threat to the Caribbean. About 27% of U.S. oil production and half of the country's refining capacity is in the Gulf of Mexico region