- The Washington Times - Tuesday, April 21, 2009

COLUMBUS, OHIO (AP) - Oil prices tumbled again Tuesday as weak corporate profits combined with a global glut of oil showed that the recession and soft demand for crude are not going away anytime soon.

Benchmark crude for May delivery fell 30 cents to $45.58 a barrel on the New York Mercantile Exchange. With Nymex’s May contract expiring Tuesday, traders were focusing more on the June contract, which was trading down 58 cents at $47.93 a barrel.

Until Monday’s share drop in crude, oil prices have traded near $50 a barrel for the last two weeks after jumping from below $35 in February as investors struggle to gauge the health of a global economy reeling from the longest recession in the U.S. since World War II.

Monday’s decline of $4.45 a barrel tracked a broad sell-off in stock prices.

“The market, with all this cheerleading, has jumped the gun,” said oil analyst and trader Stephen Schork.

Delta Air Lines and United Airlines, AK Steel, DuPont Co. and United Technologies Corp. were among companies that either reported a first quarter loss on Tuesday or said profits were down from a year ago.

“We knew the earnings would be lousy,” Schork said.

“We’re just going have to work our way through it,” he said of the glut of oil that is at storage levels last seen in 1990 after Iraq invaded Kuwait. “And we’re not going to work our way through it until we see demand for it.”

In midday trading Tuesday, the Dow Jones industrial average and the Standard & Poor’s 500 index edged up after the Dow fell 3.6 percent and the S&P; index fell 4.3 percent on Monday.

Oil had rallied along with the stock markets in hopes that an improved economy would mean more demand for crude.

“Now we’re seeing the reverse of this process,” said Jim Ritterbusch of Ritterbusch and Associates.

Traders also are focused on weekly petroleum inventory data that the Energy Information Agency will release Wednesday. Analysts expect a build of 3 million barrels in crude stocks, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Prices at the pump, meanwhile, remained flat, rising 0.2 cents overnight to $2.06 a gallon, according to AAA, Wright Express and Oil Price Information Service. Prices are 10.7 cents higher than a month ago, but $1.463 lower than a year ago.

In other Nymex trading, gasoline for May delivery was down 1.04 cents at $1.4015 a gallon and heating oil lost 0.47 cent at $1.3269 a gallon. Natural gas for May delivery fell 4.5 cents to $3.495 per 1,000 cubic feet.

In London, Brent prices fell 29 cents to $49.57 a barrel on the ICE Futures exchange.


Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.

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