HOUSTON - Exactly one year after crude eclipsed $100 a barrel for the first time, 2009 trading began Friday with prices roughly half their year-ago levels, and some believe oil could be headed even lower.
Oil markets kicked off the new year with crude climbing above $46 a barrel. A variety of factors were likely at work, including continued violence in Gaza and expectations that OPEC would carry out its largest production cut ever to stem historic price declines.
Oil market activity was also light as many traders took a long holiday weekend, and that can lead to price swings.
“I have a feeling, more than anything, it’s the thin trading conditions pushing the price higher,” said Peter Beutel of energy consultancy Cameron Hanover.
Light, sweet crude for February delivery rose $1.74 to settle at $46.34 a barrel on the New York Mercantile Exchange.
Oil’s surge into triple digits for the first time one year ago was the start of a climb that would peak above $147 a barrel by July. Since then, amid fears of a prolonged global recession and crumbling worldwide demand, crude prices have plunged more than 70 percent.
Gasoline prices ticked up a bit overnight, but the average price for a gallon of unleaded is still more than $1.40 cheaper than a year ago.
“Thank goodness that’s over!” Raymond James & Associates said in a note to clients Friday, summing up what many traders feel after the most volatile year since crude futures were first offered on Nymex in 1983.
A weakened manufacturing sector suggests demand for energy will not rebound any time soon.
Activity in the U.S. oilfield already reflects expectations for anemic demand. Baker Hughes reported Friday the number of rigs actively exploring for oil and natural gas in the United States fell by 98 last week to 1,623. That’s nearly 16 percent fewer rigs at work than when oil prices peaked in July, and 9 percent below the year-ago figure.
The Department of Energy said Friday it plans to take advantage of the huge drop in crude prices and is soliciting bids to buy 12 million barrels of oil this year to replenish the nation’s Strategic Petroleum Reserve.