Oil dives for sixth day as bad news piles up for price bulls

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Oil prices are down for a sixth straight session today, the longest losing streak since mid-December, on the triple-whammy of economic fears, rising gasoline supplies and growing calls to rein in speculators in futures markets.

Near-term crude futures were down $1.77, or 2.8%, to $61.16 a barrel at about 11 a.m. PDT. The price now has tumbled 16% since reaching $72.68 on June 11, and is the lowest in seven weeks.

Gasoline futures also are plummeting, down 6.3 cents, or 3.6%, to $1.67 a gallon. The price peaked at $2.07 on June 16.

From Bloomberg News:


Gasoline stockpiles climbed 1.9 million barrels to 213.1 million in the week ended July 3, more than twice the increase forecast in a Bloomberg News survey, the Energy Department said. Inventories of distillate fuel, a category that includes heating oil and diesel, rose to the highest since 1985 as consumption dropped to a 10-year low. ‘The market is starting to focus on the weak fundamentals,’ said Antoine Halff, head of energy research at Newedge USA in New York. ‘The deterioration of the fundamentals should continue in the weeks ahead. The drop in prices has yet to run its course.’

Traders took no comfort in data showing that U.S. oil inventories fell last week. Supplies still are 7.4% higher than the five-year average for this point in the year.

Commodity prices have been slumping in tandem with the stock market over the last week as investors has lost faith in an economic rebound in the second half. That sentiment ballooned after the dismal June employment report last Thursday.

The U.S., British and French governments also may be spooking players in the oil market by threatening to limit what they view as excessive speculation.

The Commodity Futures Trading Commission on Tuesday said it would hold hearings on whether to impose limits on the dollar value of bets that a single speculator could make via commodity futures.

Separately, British Prime Minister Gordon Brown and French President Nicolas Sarkozy used the op-ed page of the Wall Street Journal today to call for steps to reduce ‘damaging speculation’ in the oil market.

‘Governments can no longer stand idle,’ they wrote. ‘Volatility damages both consumers and producers.’

They weren’t specific about what to do -- other than calling for greater ‘transparency and supervision’ of futures trading -- but in a falling market they’re giving oil speculators another excuse to exit.

-- Tom Petruno