Oil prices fall for a ninth straight day amid weak demand

Price of gasoline in Massachusetts is down 2 cents

Associated Press / December 15, 2009

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NEW YORK - Oil prices fell for the ninth straight day yesterday, slipping below $68 per barrel on persistent concerns about high inventories and weak demand.

Retail gasoline prices have slipped for weeks as well, falling overnight by less than a penny to $2.603 per gallon.

After about a month of holding steady, the price of a gallon of gas in Massachusetts has dropped two cents.

AAA Southern New England said self-serve regular has fallen to an average of $2.59 per gallon, which is still a penny below the national average, but 93 cents above the cost at the same time last year.

AAA in its survey found a low of $2.36 and a high of $2.89 per gallon.

The supply of crude is back in the spotlight one week before the Organization of the Petroleum Exporting Countries meets in Angola to talk about production.

A number of member states have strayed from lower production quotas that OPEC put into place to help shore up collapsing oil prices earlier this year, analysts say.

“Sure, it is easy to comply with your production targets when there are no buyers for your oil, but not so much when you can actually find some buyers, said a PFG Best analyst, Phil Flynn.

Crude supplies in the United States have risen six out of the past 10 weeks because the refiners that convert it into crude have been cutting back on production.

There are also reports of a growing amount of oil stored at sea in tankers.

Some exporting countries and even large investors choose to keep some oil off the markets until prices improve.

That can depress prices, if investors think a lot of oil held off the market could be delivered soon.

Benchmark crude for January delivery fell 36 cents to settle at $69.51 on the New York Mercantile Exchange after falling as low as $68.59.

Yet oil prices have remained stubbornly high, most energy experts say, because those who are still buying it are doing so based on the value of the dollar, rather than on actual demand.

Because crude is priced in the US currency, investors holding stronger currencies can effectively buy more oil for less money.

But demand for fuel in the United States has barely nudged from last year, when there were fears of a full-blown depression.

Many of those dollar based-trades began to fade at the beginning of December, just when the dollar began to rebound.

In other Nymex trading in January contracts, heating oil rose less than a cent to $1.9161 while gasoline fell 1.49 cents to settle at $1.8267.

Natural gas rose 8.6 cents to $5.249 per 1,000 cubic feet.

In London, Brent crude for January delivery gained a penny to settle at $71.89 on the ICE Futures exchange.