This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Oil Prices Drop Below $100 Per Barrel

Oil Prices Drop Below $100 per Barrel

For the first time since July, oil futures are down below $100 per barrel. Crude for November delivery was down $1.59 yesterday, to $99.22. Meanwhile, West Texas Intermediate crude oil for December delivery was down $1.43, to $99.68 per barrel, on the New York Mercantile Exchange (NYMEX).

Partially responsible for falling prices are rising stockpiles in the US — this week, a report from the Energy Information Administrationapointed to a 4-million-barrel addition to domestic supply for the week ended October 11. Other factors contributing to dropping oil prices include seasonal refinery maintenance, "substantive" meetings between Iran and the five powers of the UN over nuclear negotiations and OPEC's statement this weekend that the world is currently adequately supplied when it comes to oil.

Commenting on the impact that falling oil prices will have on investors was Phil Flynn, a senior market analyst at Price Futures Group in Chicago. He told Bloomberg that after having crossed below $100 per barrel of oil, "the fundamentals are heavy and people are starting to try to protect their oil position on the downside."

Good for investors?a

Generally speaking, falling prices are not good for investors. However, Bloomberg's Adam Johnsonamakes a case for the benefits that sub-$100 oil prices can have for refineries — and, by extension, consumers and investors — by arguing that refineries tend to just scrape by when using a NYMEX futures product called the "3-2-1 Crack Spread" to hedge against refining costs.

NYMEX's 3-2-1 Crack Spread runs on the principle that three barrels of crude are equal to two barrels of gasoline and one barrel of heating oil, for instance. Looking at the spread, Johnson highlights that refiners are not profitable until the spread is around $10 per barrel. Lately, refineries have been producing at a proxy of at least $10/bbl, which brings up the argument that lower prices will be better for the refineries that are currently trading at "mid-single digit price-to-earnings ratios."

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs