Crude falling despite news of another OPEC meeting
By MARK WILLIAMS,AP Energy Writer AP - Saturday, November 15
COLUMBUS, Ohio - Crude markets ignored word of another emergency meeting later this month by OPEC to address falling crude prices, focusing instead Friday on the largest ever October plunge for retail sales and a sharp drop in business inventories.
Almost every economic report suggests a dramatic pullback in spending on energy, sending crude down another 3 percent Friday
Light, sweet crude for December delivery fell $1.74 to $56.50 a barrel on the New York Mercantile Exchange.
The Organization of Petroleum Exporting Countries held an emergency meeting only three weeks ago and slashed production quotas by 1.5 million barrels a day.
Bench mark crude prices have dipped another 8 percent since then, suggesting that demand for energy has fallen so fast amid a global slowdown that OPEC, for the moment, has lost much of its ability to control the price of oil through production cuts.
Instead, crude was taking its cue from more dour economic news.
The Commerce Department said Friday that retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.
The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.
The Commerce Department also said business inventories dropped by 0.2 percent in September. It was the first decline since March 2007 and the biggest drop in more than three years, since inventories fell by 0.3 percent in July 2005.
OPEC is trying to take oil off the market to keep pace with deteriorating demand.
An OPEC official said the 13-member states would meet in Cairo Nov. 29 on the sidelines of a previously planned meeting for Arab members of the group.
The official asked not to be named because the Vienna-based organization is not issuing a formal statement.
The hastily arranged meeting comes just weeks ahead of a previously set Dec. 17 gathering in Oran, Algeria.
The cuts from three weeks ago show that there simply is not enough demand to turn prices around, said Jim Ritterbusch, president of energy consultants Ritterbusch and Associates.
"During periods when demand is exceptionally weak as it now, they tend to lose pricing power," he said of OPEC.
But OPEC has to do something, he said. Maintaining production levels would make oil consuming countries happy, but probably drag prices down another $5 or $10 a barrel, he said. OPEC has trouble meeting the production cuts it sets anyway.
Oil prices have fallen about 60 percent during the last four months after reaching $147.27 in July.
OPEC, which produces about 40 percent of world supplies, has said it may cut production by the end of this month if prices continue to fall.
Before the 1.5 million barrel cut, OPEC said it was taking 520,000 barrels out of daily production. That too was brushed off by the market.
Meanwhile, the government said Friday that natural gas stockpile levels in the U.S. rose more than expected last week, but are 2 percent below the year-ago average.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 62 billion cubic feet to about 3.47 trillion cubic feet for the week ended Nov. 7.
Analysts had expected a boost of between 41 billion to 46 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The news sent natural gas for December delivery down 20 cents to $6.115 per 1,000 cubic feet on the New York Mercantile Exchange on Friday.
The national average price for regular gasoline fell again overnight, down 2.6 cents to $2.152 a gallon, according to according to auto club AAA, the Oil Price Information Service and Wright Express. That is nearly $1 a gallon below what it was a month ago.
In other Nymex trading, heating oil futures fell 3.67 cents to $1.838 a gallon, while gasoline prices dropped 6.8 cents to $1.23 a gallon.
Associated Press writers George Jahn in Vienna and Alex Kennedy in Singapore contributed to this report.
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