Oil trends sustainable

NEW YORK, July 9 (UPI) -- Declines in oil prices, retreating from highs near $70 per barrel, are based on market principles, making speculators nervous.

Oil prices on the New York Mercantile Exchange fell more than 4 percent in Wednesday trading, The Wall Street Journal reports. Slumping demand in a recessionary economic climate coupled with a surplus of fuel reserves is putting a strain on price expectations, the Journal notes.

Top officials with the Organization of Petroleum Exporting Countries said they were looking for a rebound toward $75 per barrel by the end of 2009. But the Journal reports some refiners are scaling back production while increasing storage capacity, which will further suppress crude prices.

OPEC slashed more than 7 million barrels from demand forecast for 2030, meaning the trend appears sustainable.

Meanwhile, U.S. market regulators said they would tighten the rules for energy traders in an effort to curb the effect of speculators.

OPEC in June blamed market speculation for the "unprecedented" volatility in energy prices in 2008, which brought oil prices close to the $150-per-barrel mark.

"Speculators fearing a crackdown," the Journal notes, "might want to use the time they have left to sell short."