Oil was recently down $7.53 at $107.93. From MarketWatch:
U.S. stock futures climbed on Tuesday to start a holiday-shortened week after limited hurricane damage to the Gulf Coast and the oil installations in the Gulf of Mexico caused oil futures to tumble.S&P 500 futures rose 10.6 points to 1,293.20 and Nasdaq 100 futures rose 20 points to 1,895.00. Dow industrial futures rose 98 points.U.S. stocks ended Friday on a dour note, with the Dow Jones Industrial Average losing 171 points, the Nasdaq Composite dropping 44 points and the S&P 500 losing 17 points....
Earlier this year, it did not take much to disrupt the price of oil and send it rocketing up. The market was inclined to believe that almost all news about crude was bad news. OPEC was aligned against US interests. Demand in China was insatiable. Speculators were making hundreds of millions of dollars manipulating prices higher to profit from their long positions.
Most of that has clearly changed, but the evidence from Gustav's run through the Gulf shows that it has changed more than expected and that the alterations may be nearly permanent.
As recently as June, news of a supply interruption would move crude up a few dollars. A broken pipeline in Canada did it and so did concerns about storms in the North Sea and political unrest in Nigeria. Oil would move to $200 and nothing was likely to stop it.
In the case of Gustav, oil prices dropped $4 to $109 before the damage from the storm could even be assessed. Some companies made statements that there had been no devastation, but not one could state with certainty that they had not lost some capacity.
In just three months, the psychology of oil prices have moved from one of neurosis to one of normality....MORE