Oil, gas prices remain down as OPEC meeting nears

Associated Press / November 29, 2008
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HOUSTON - Oil prices ended flat yesterday with OPEC officials sending mixed messages about a production cut before a regularly scheduled meeting in December.

Meanwhile, gasoline prices continued their free fall and are now at levels not seen since Jan. 21, 2005 - good news for travelers heading home after Thanksgiving getaways.

Pump prices fell a penny overnight to a national average of $1.84 for regular unleaded, according to auto club AAA, the Oil Price Information Service, and Wright Express.

The average national price has fallen 75 cents in the past month alone and is down 41 percent from the $3.09 retailers were getting on average a year ago.

After tumbling earlier in the day during an abbreviated session on the New York Mercantile Exchange, light, sweet crude for January delivery settled down a penny at $54.43.

Yet for most of the day, trading at Nymex was as volatile as it had been for the entire week, save for Thursday when the market was closed for the Thanksgiving holiday.

Crude jumped 9 percent Monday, fell 7 percent Tuesday, and rose more than 7 percent Wednesday. The week has been marked by light trading, which tends to be more volatile.

For the week, crude was up about 9 percent from the settlement price last Friday.

"We were a little overcooked earlier this week, so it looks like we're going to give some of it back today," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Oil prices fluctuated between $50 and $55 this week, pausing after a fall of more than 60 percent since reaching a trading record of $147.27 in mid-July.

Grim economic data this week pointing to a severe US recession in the fourth quarter and signs of slowing growth around the world kept prices from rebounding further.

"The drop-off in demand is going to continue," said Jonathan Kornafel, Asia director at market maker Hudson Capital Energy in Singapore. "There's no reason for the market to rally."

Oil will likely trade below $50 a barrel and could test the $40 level by the end of the year, Kornafel said.

Investors will be watching whether the Organization of Petroleum Exporting Countries reduces output quotas at an informal meeting today in Cairo.

OPEC oil ministers yesterday downplayed expectations of, but didn't dismiss outright, an immediate output cut.

"I don't expect a cut out of the Cairo meeting, but I do expect a 1.5-million barrel cut at their December meeting," Kornafel said. "I wouldn't be surprised to see Russia get in with OPEC either."

Energy analyst Catherine Hunter at IHS Global Insight in London said chances for quick implementation of further output cuts by OPEC were slim because of advance sales allocations by several members.

"This makes the meeting more about New Year's resolutions rather than the immediate present, whatever the rhetoric surrounding Saturday's event," Hunter said in a report.

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