Oil tumbles in repeat of last week’s big drops

Wednesday, July 23, 2008 at 11:07 am

Oil prices have tumbled more than $3 a barrel as Tropical Storm Dolly grew increasingly unlikely to threaten supply, giving traders one less reason to buy as a strengthening dollar helped keep prices in check.

The sell-off on Tuesday was a throwback to last week’s sharp declines, and dragged crude to its lowest level since early June. It was oil’s fifth decline in the last sixth sessions.

Light, sweet crude for August delivery fell $3.09 to settle at USD 127.95 a barrel in its last trading day on the New York Mercantile Exchange. Earlier the contract, which will be replaced by September crude today, dropped as low as $125.63.

In London, September Brent fell $2.27 to settle at $129.55 a barrel on the ICE Futures exchange.

The drop offered further evidence that investors who only a week and a half ago drove prices to a new high above $147 a barrel are now quickly pulling money out of the market. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down — just as incremental supply concerns previously drove prices sharply higher.

“This is more of the long exit from the market by the hedge funds,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

“A lot of these investors who have been supporting prices are hitting the road.”

In Washington, the Senate voted 94-0 to move ahead with a plan that would require the Commodity Futures Trading Commission to set limits on trading in oil markets by certain large investors.

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

Oil tumbles in repeat of last week’s big drops

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