Oil prices stabilized Friday as the White House's $17.4 billion auto industry rescue package gave Wall Street a boost and the dollar strengthened against the euro. Light, sweet crude for February delivery rose 69 cents to settle at $42.36 a barrel on the New York Mercantile Exchange. In London, February Brent crude rose 64 cents to settle at $44 a barrel on the ICE. The extreme volatility in energy markets this year has seen crude pushed from $100 to nearly $150 between January and July, and back down to the $30 to $40 range this month. Peter Beutel, an analyst with Cameron Hanover in New Canaan, Connecticut, said he sees a lot of factors that should be leading to a bullish market, but they are not getting any traction because of the weak economy and falling demand. “Until people can just take their eyes off of the demand for five seconds, it doesn't seem like this market is going to have an easy time moving higher right away,” Beutel said. The January contract, which expired Friday, fell $2.35 cents to settle at $33.87, the lowest close in nearly five years. Analysts largely discounted the January price, with the volume of the next month contract trading at 3 times the volume. Yet analyst Jim Ritterbusch said pre-expiration lows do provide a downside target to the next contract. Ritterbusch, president of energy consultancy Ritterbusch and Associates, said the market is sending strong signals that an oversupplied market will remain in place for some time. “I think it's going to work its way down to today's lows in the January futures,” he said. The January contracts were at steal at that low price, Beutel said, but the question is where are you going to keep it. Rising stockpiles in Cushing, Oklahoma, have put storage space at a premium. “If you could find storage for it, it's a way to get rich real quickly,” Beutel said. Oil producers have leased supertankers to store crude at sea while they wait for prices to rise. At an energy summit Friday on London, British Prime Minister Gordon Brown warned that a failure to stabilize oil prices could cost the global economy trillions. “Wild fluctuations in market prices harm nations all round the world,” Brown said. “They damage consumers and producers alike.” OPEC Secretary-General Abdullah El-Badri acknowledged the problem. “We all know that extreme oil prices whether too high or too low are as bad for producers as they are for consumers,” El-Badri said. Meanwhile, Zeljko Bogetic, the World Bank's chief economist in Russia, told investors that the oil-rich nation would come under crippling financial pressure and may need to take out loans if crude prices do not rebound. “If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy,” Bogetic said. Russia, which has used oil profits during the past eight years to pay down most of its foreign debt, could turn from creditor to borrower if current trends continue. At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, Bogetic said. Earlier this week, the 13-nation Organization of Petroleum Exporting Countries slashed its output quota by 2.2 million barrels a day in a bid to bolster prices that have slid about 70 percent since July. Still, crude prices tumbled this week amid a bevy of dour economic reports suggesting demand for energy will continued to erode.
