Oil prices at 14-month low on slowdown fears
VIENNA, Austria (AP) — Oil prices fell to a 14-month low Thursday as bad U.S. economic news stoked fears that an significant global economic slowdown will undermine demand for crude.
The demand for oil is expected to keep falling in the coming months as growth slows.
Concerns over the economy overrode growing expectations that the Organization of Petroleum Exporting Countries could opt to cut back production in an effort to shore up prices.
By mid-afternoon in Europe, light, sweet crude for November delivery was down USUSD 1.07 to USUSD 72.10 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. Earlier in the session, prices fell as low as USUSD 71.21.
The contract fell overnight USUSD 4.09 to settle at USUSD 74.54, the lowest settlement price since Aug. 31, 2007.
Oil prices are now half of the peak they reached in mid-July.
“The market is just very worried about a severe international economic downturn,” said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. “They’re thinking that oil consumption will be weaker than expected.”
Investors were discouraged Wednesday by a U.S. Commerce Department report that showed retail sales dropped in September by 1.2 percent, a sign that turmoil in the credit markets has begun to slow consumer spending. Later in the day, the Beige Book, the assessment of business conditions from the Federal Reserve, said that the economy continued to slow in the early fall.
Japan’s benchmark Nikkei 225 stock average was down nearly 10 percent Thursday while the Dow Jones industrials plummeted 733 points Wednesday, or 7.9 percent, it’s second-largest point loss ever.
“If we’re in the grips of a severe downturn, it’s very hard to pick where things will bottom,” Moore said. “There’s the potential that bad economic news will continue to rattle markets.”
Trader and analyst Stephen Schork linked Wednesday’s downward turn to macroeconomic trends.
“The Dow tanked and the bucks rallied,” he said in his Schork Report.
Investors are beginning to anticipate an output cut by the Organization of Petroleum Exporting Countries at its next meeting in November in a bid to boost prices, Moore said.
OPEC said in a report Wednesday that oil consumption dropped in developed countries by more than 1 000 000 barrels a day in September compared to the same period a year earlier. Demand growth from developing countries increased by a daily 1.2 000 000 barrels over the same time, OPEC said.
“OPEC may try to take some action,” Moore said. “It’s quite likely they will adjust lower their production targets.”
In London, November Brent crude fell USUSD 1.05 to USUSD 69.75 a barrel.
All AboutOil PricesCommodity MarketsBusiness
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment