Oil Price Down Down Down .......................

Oil price is heading for consolidation and I would not be surprised if it will hit US110 soon and will hovering around that price for few months.

Switch your money to equity now for this summer. Olympic is coming and China government will release more measures to support the equity market. "One world, One Dream" A stable equity market will psychologically put Chinese people in better mood to enjoy Olympic. My target for Hang Seng index is 25,000 by end of August 08.

As for Dow Jones, it should hit 12,000 by middle of August 08 or sooner. US Presidential election is coming and you can see how hard Bush administration trying to support the market. Stock market is the last fortress for US economy...............................

Oil hits seven-week low on demand worries

Stronger U.S. dollar also sparks another dramatic sell-off

Oil prices have fallen more than 15% since setting a record on July 11, but prices remain nearly 65% higher than a year ago.

Oil prices tumbled more than $2 a barrel Tuesday, finishing at their lowest level in seven weeks as a stronger dollar and beliefs that record prices are eroding the world’s thirst for energy sparked another dramatic sell-off.

The drop — which surpassed $4 a barrel at one point during the day — was a throwback to oil’s nosedive over the past two weeks and outweighed supply concerns touched off by a militant attack Monday on two Nigerian crude pipelines. It was oil’s seventh decline in the last 10 sessions.

Light, sweet crude for September delivery fell $2.54 to settle at $122.19 on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since June 10. Earlier, prices fell to $120.42, also the lowest level since June 10. Oil has now fallen more than $25 from its trading high of $147.27, reached July 11.

More concerns that crude’s run-up over the past year has pushed prices to unsustainable levels fed Tuesday’s decline. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May — or 3.7 percent — compared to the same period last year, the biggest drop ever for the historically busy summer driving month.

And demand for oil in the U.S. — the world’s thirstiest consumer — continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department’s Energy Information Administration said Monday.

“We’re seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold.

“Once we break through $120, we could easily slide through to $100,” said Darin Newsom, senior analyst at DTN in Omaha.

Also weighing on prices was a sharply stronger dollar compared to the euro, which made commodities less attractive to investors who have bought oil futures as a hedge against inflation and weakness in the U.S. currency.

The euro bought $1.5584 compared with $1.5752 late Monday in New York.

“It looks like oil is selling off today with the very, very strong dollar and nothing to drive it higher. Quiet seems to be bearish these days,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service in Wall, N.J.

In another sign that high prices are curbing Americans’ consumption for fuel, retail gas prices fell further below the $4-a-gallon mark. The average price of a regular gas fell 1.7 cents to $3.941, according to auto club AAA, the Oil Prices Information Service and Wright Express.

Monday’s attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC and was the latest in a two-year campaign of attacks on the country’s oil industry. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment.

The oil company said Tuesday it may not be able to fulfill some oil-export contracts because of the damage. Shell didn’t specify how much oil production was cut by the attack or how long repairs would take.

The Movement for the Emancipation of the Niger Delta says it is acting to force the Nigerian federal government to send more oil industry funds to the southern region, which produces all of Nigeria’s crude oil but remains impoverished after decades of corrupt and wasteful governance.

Analysts at JBC Energy in Vienna, Austria, estimated the repeated attacks on country’s oil installations, Nigeria’s output had fallen to just below 1.9 million barrels a day from more than 2.4 million barrels a day in 2005.

Oil market analysts are awaiting U.S. data later in the week for indications of how the world’s largest economy could be expected to perform in coming months. Figures for gross domestic product for the second quarter will be released Thursday, while July auto sales and the July employment report are both due Friday.