Oil Prices Down Again on Persistent Demand Concerns

The price of crude oil, following its biggest one-day gain of 2009 yesterday, dropped sharply this morning, weighed down by resurgent worries over demand for oil in a world mired in recession. New depths plumbed by European and Asian stock markets today reinforced the global nature of the current recession and showed that strong economies outside the U.S. will not be recovering any time soon.

On the last day of trading for the March contract, crude’s price had dropped 5.4 percent to $37.40 a barrel by 9:27 am eastern time. The price of heating oil had fallen 3.8 percent by 9:35 am.

Concern over oil demand continues to dominate the markets, according to Harry Tchilinguirian, commodities analyst at BNP Paribas in London, quoted on CNBC.com: “The overall driving trend will be the economy as the market remains demand-focused. We expect this to be the case for the entire first half of the year.” While OPEC production cuts have been able to substantially reduce supply, investors are still waiting for overall supplies to meet the slack in demand.

HEAT USA price experts confirmed yesterday evening’s expectations of a moderate increase in retail heating oil prices today, but were pleased to see another significant drop in market prices that will hopefully bring about lower retail prices through Monday.

HEAT USA Price Report
Today’s average retail heating oil price per gallon: UP $0.05 to $0.06
Morning projection (for Monday’s average retail price per gallon): DOWN $0.02