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WOODSIDE chief executive Don Voelte reckons the sharp slide in global oil prices is good news, even if lower prices will hit earnings for the leading oil and gas producer.
''I wasn't a fan of $US120 [a barrel] oil because we know demand starts dropping off because
people don't buy as much petrol, people start turning off their
air-conditioners,'' Mr Voelte said in Melbourne yesterday.
''I'm much more comfortable with oil prices in the $US80 to $US100 range. We make a lot of money in our company at that level; if you get too high, there are problems that happen from that.''
Mr Voelte got his wish overnight, with US oil prices crashing 8.6 per cent to $US99.80 a barrel, leaving it almost $US10 a barrel short of its April monthly average, but still well ahead of the $US84-a-barrel average in April 2010.
Mr Voelte was referring to the demand destruction that comes when global oil prices rise.
The same can be said about the impact of historic highs for the broad range of mineral commodities.
Combined with fears that the US recovery is not as robust as hoped and that Europe's debt crisis has a long way to run, the scene was set for the overnight rout in oil and the rest of the mineral commodity markets.
Because oil and other minerals continue to trade at prices well above their long-term averages, the share price damage to resource companies was not as bad as the 4-8 per cent fall in commodity prices might normally have triggered.
Overnight falls in commodity prices included those for silver (12 per cent); gold (2.8 per cent); copper (3.3 per cent); aluminium (4.2 per cent); nickel (5 per cent); and tin (6.6 per cent).
BHP Billiton fell 86¢, or 1.9 per cent, to $44.58, while Rio Tinto shed $1.52, or 1.87 per cent, to $79.57.
In the gold sector, Newcrest lost 85¢, or 2.11 per cent, to $39.38. In the oil and gas sector, Woodside fell a modest 24¢, or 0.5 per cent (it announced a 100 million barrel oil discovery on Wednesday) to $45.31, and Santos was off by 50¢, or 3.3 per cent, at $14.46.
Richard Morrow at EL & C Baillieu said the slump overnight came as ''speculators fought to rush out of the market - all at the same time''.
Mr Morrow said that the biggest driver in commodity prices remained the demand side. ''And the biggest customer on the demand side is China, where the economy is still growing at 10 per cent a year,'' he said. ''China's growth is forecast to drop to 8 per cent, which is still enough to stretch the capabilities of the supply side of most commodities.''
Silver's decline from historic highs this week has been particularly severe.
At $US36 an ounce, it is down 28 per cent for the week. But it is still twice the $US18 an ounce it fetched in April last year.
The metal's sharp decline in recent days has been blamed on the big increase in the cash margin that traders in US silver futures have had to lodge as the price marched to its highest in more than 30 years.
''I wasn't a fan of $US120 [a barrel] oil because we know demand starts dropping off because
people don't buy as much petrol, people start turning off their
air-conditioners,'' Mr Voelte said in Melbourne yesterday.
''I'm much more comfortable with oil prices in the $US80 to $US100 range. We make a lot of money in our company at that level; if you get too high, there are problems that happen from that.''
Mr Voelte got his wish overnight, with US oil prices crashing 8.6 per cent to $US99.80 a barrel, leaving it almost $US10 a barrel short of its April monthly average, but still well ahead of the $US84-a-barrel average in April 2010.
Mr Voelte was referring to the demand destruction that comes when global oil prices rise.
The same can be said about the impact of historic highs for the broad range of mineral commodities.
Combined with fears that the US recovery is not as robust as hoped and that Europe's debt crisis has a long way to run, the scene was set for the overnight rout in oil and the rest of the mineral commodity markets.
Because oil and other minerals continue to trade at prices well above their long-term averages, the share price damage to resource companies was not as bad as the 4-8 per cent fall in commodity prices might normally have triggered.
Overnight falls in commodity prices included those for silver (12 per cent); gold (2.8 per cent); copper (3.3 per cent); aluminium (4.2 per cent); nickel (5 per cent); and tin (6.6 per cent).
BHP Billiton fell 86¢, or 1.9 per cent, to $44.58, while Rio Tinto shed $1.52, or 1.87 per cent, to $79.57.
In the gold sector, Newcrest lost 85¢, or 2.11 per cent, to $39.38. In the oil and gas sector, Woodside fell a modest 24¢, or 0.5 per cent (it announced a 100 million barrel oil discovery on Wednesday) to $45.31, and Santos was off by 50¢, or 3.3 per cent, at $14.46.
Richard Morrow at EL & C Baillieu said the slump overnight came as ''speculators fought to rush out of the market - all at the same time''.
Mr Morrow said that the biggest driver in commodity prices remained the demand side. ''And the biggest customer on the demand side is China, where the economy is still growing at 10 per cent a year,'' he said. ''China's growth is forecast to drop to 8 per cent, which is still enough to stretch the capabilities of the supply side of most commodities.''
Silver's decline from historic highs this week has been particularly severe.
The metal's sharp decline in recent days has been blamed on the big increase in the cash margin that traders in US silver futures have had to lodge as the price marched to its highest in more than 30 years.
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