Oil price hit 7-week low by Petra Kamenicka

Oil price continues to fall down. On Tuesday, prices declined more than 2$ a barrel and finished at their lowest point in seven weeks. The main reasons for this rapid decrease were dollar that gains value and weak demand for energy sources, caused by record prices. Euro is now about 1,5584$ compared with 1,5752$ late Monday. Unbearable prices of oil that led to rising price of gas on gas stations caused, that drivers in USA logged 3,7 % or 9,6 million vehicle miles fewer, compared to the same time in a previous year. It was unusually big drop in such a busy driving month. Demand for oil is declining too. It is dropping by 891,000 barrels per day in May. As Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, noticed: We’re seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture,”
Evidence that American consumption of oil is delimited is falling price of gas on gas stations in USA. Retail gas prices fell below 4 dollars per gallon. They fell 1,7 cents and settled at 3,941$ per gallon.
After oil price fell below 122$, the declines of prices accelerated. 122$ is a key resistance level, that started technical selling by computers, which are programmed to dump oil contracts when price reaches some lever. When oil falls under psychological threshold 120$ per barrel, it can easily reach 100$. Other commodities connected to oil are declining too. On Nymex, oil futures fell 8,98 cents and settled at 3,4722$ a gallon and gasoline prices fell 6,23 cents to 3,0077$ a gallon.


related story: http://www.economist.com/opinion/displaystory.cfm?story_id=11670357

by Petra Kamenicka for PocketNews (http://pocketnews.tv)

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