Refer article below. Suggests longterm price of oil is $70-80.
Maybe that is what the market is factoring in.
What impact would this have on CVN?
Crude Oil Trades Near 12-Week Low on Falling Gasoline Demand
By Nesa Subrahmaniyan
July 30 (Bloomberg) -- Crude oil traded near the lowest in 12 weeks on speculation gasoline demand growth in Asia and the U.S. may slow after near-record prices reduced consumption.
A cut in Asian fuel subsidies has pushed up prices, damping demand, said Singapore Petroleum Co., the island nation's only refiner. A U.S. Energy Department report today may show that gasoline supplies rose for a fifth week, according to a Bloomberg News survey. Gasoline use has slipped for 14 straight weeks, MasterCard Inc. reported yesterday.
``The market is bracing for a slowdown and the report tonight could reinforce bearish views,'' said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. ``Consumption is not going great in the U.S.,'' the world's biggest energy user.
Crude oil for September delivery was at $121.90 a barrel, down 29 cents, at 10:49 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, it fell $2.54, or 2 percent, to $122.19 a barrel, the lowest close since May 6. Prices are up 59 percent from a year earlier.
The Energy Department report today will probably show that gasoline inventories rose 400,000 barrels last week, according to the Bloomberg survey.
India, Vietnam, Malaysia and Indonesia have raised prices of diesel and gasoline in the past two months to cut government expenditure aimed at capping fuel prices and keeping inflation in check.
Gasoline Falls
U.S. motorists drove less for a seventh consecutive month in May, as vehicle-miles traveled on all U.S. roads fell 3.7 percent during the month from a year earlier, the Federal Highway Administration said in a report July 28. The seven-month slide is the longest downward streak since 1979.
Demand for oil and petroleum products dropped 4.3 percent in May from a year earlier to 19.7 million barrels a day, according to Energy Department data released July 28. That's 889,000 barrels a day less for the first five months of the year, compared with the same period a year earlier.
U.S. refining profits have fallen because oil companies are making more gasoline than drivers need, as a result of running refineries to satisfy demand for diesel, BP Plc's top refining executive said.
``Very strong distillate demand around the world'' is ``causing people to run refineries very hard,'' Iain Conn, the head of BP's refining and marketing business, said yesterday on a conference call with investors. Gasoline is produced like ``a byproduct'' and ``actually hasn't got a particularly strong demand profile right now.''
Demand Destruction
There is 5 percent to 10 percent gasoline ``demand destruction'' now from the year ago in industrialized nations of the Organization for Economic Cooperation and Development, BP Chief Executive Officer Tony Hayward told reporters in London yesterday.
Gasoline futures for August delivery fell 1.17 cents, or 0.4 percent, to $2.9960 a gallon in New York.
Regular gasoline at the pump, averaged nationwide, fell 1.7 cents to $3.941 a gallon, AAA, the nation's biggest motoring group, said yesterday on its Web site.
Brent crude for September delivery was at $122.42 a barrel, down 29 cents, at 10:35 a.m. Singapore time on London's ICE Futures Europe exchange. Yesterday, it fell $3.13, or 2.5 percent, to $122.71 a barrel yesterday, the lowest close since June 4.
OPEC President Chakib Khelil said yesterday in Jakarta should the dollar strengthen and political tensions in the Middle East ease, then the long-term oil price will be about $70 to $80 a barrel.
The Organization of Petroleum Exporting Countries produces about 40 percent of world oil supplies.
Oil prices have dropped more than $25 a barrel, or 17 percent, from the July 11 record.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at [email protected].
Last Updated: July 29, 2008 23:14 EDT
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