Grim economic news pulls oil prices lower
Friday, 21 November 2008
SINGAPORE, Nov 20 (AFP): Increasingly grim global economic news and the prospects for even weaker demand for energy pulled world oil prices lower today, analysts said.
In afternoon trade New York's main futures contract, light sweet crude for December delivery, dropped 84 cents to 52.78 dollars a barrel, on top of a 77-cent drop Wednesday at the New York Mercantile Exchange.
The contract closed at 53.62 but in pre-market trade dropped to 53.30 dollars, the lowest point since January 2007.
Brent North Sea crude for delivery in January eased 92 cents to 50.80 after falling 12 cents to 51.72 dollars Wednesday in London.
The contract hit an intraday low of 50.61, the lowest level in three and a half years.
"The bearish signals continue to really overwhelm the global economy," said Victor Shum, of Purvin and Gertz international energy consultancy in Singapore.
Concern for slowing global economic growth and its impact on energy demand has already led oil prices to plummet from record peaks above 147 dollars in July.
"Right now I think we are looking at 50-dollar crude in the short-term," Shum said.
The latest weekly US Department of Energy (DoE) report on energy stockpiles supported the bearish sentiment, analysts said.
Crude stocks in the world's largest energy consumer rose more than expected, while during the past four weeks the average consumption of petroleum products fell 7.0 per cent from a year ago.
Among bullish factors, he said, was the seizure by pirates of a Saudi Arabian tanker, the Sirius Star, loaded with two million barrels of oil.
Pirates took control of the vessel hundreds of miles (kilometres) off the Kenyan coast at the weekend, and Saudi Arabia's foreign minister said the owners were negotiating with them.
Jason Feer, of energy market analysts Argus Media in Singapore, said the amount of oil involved was not in itself large enough to affect the crude market, although piracy was having other consequences.
"What seems to be happening is that piracy incidents around Somalia have gotten so bad that companies are avoiding using that route," Feer said.
They now prefer a longer, costlier route, which could be potentially disruptive to Asian crude deliveries, he said Wednesday.
In afternoon trade New York's main futures contract, light sweet crude for December delivery, dropped 84 cents to 52.78 dollars a barrel, on top of a 77-cent drop Wednesday at the New York Mercantile Exchange.
The contract closed at 53.62 but in pre-market trade dropped to 53.30 dollars, the lowest point since January 2007.
Brent North Sea crude for delivery in January eased 92 cents to 50.80 after falling 12 cents to 51.72 dollars Wednesday in London.
The contract hit an intraday low of 50.61, the lowest level in three and a half years.
"The bearish signals continue to really overwhelm the global economy," said Victor Shum, of Purvin and Gertz international energy consultancy in Singapore.
Concern for slowing global economic growth and its impact on energy demand has already led oil prices to plummet from record peaks above 147 dollars in July.
"Right now I think we are looking at 50-dollar crude in the short-term," Shum said.
The latest weekly US Department of Energy (DoE) report on energy stockpiles supported the bearish sentiment, analysts said.
Crude stocks in the world's largest energy consumer rose more than expected, while during the past four weeks the average consumption of petroleum products fell 7.0 per cent from a year ago.
Among bullish factors, he said, was the seizure by pirates of a Saudi Arabian tanker, the Sirius Star, loaded with two million barrels of oil.
Pirates took control of the vessel hundreds of miles (kilometres) off the Kenyan coast at the weekend, and Saudi Arabia's foreign minister said the owners were negotiating with them.
Jason Feer, of energy market analysts Argus Media in Singapore, said the amount of oil involved was not in itself large enough to affect the crude market, although piracy was having other consequences.
"What seems to be happening is that piracy incidents around Somalia have gotten so bad that companies are avoiding using that route," Feer said.
They now prefer a longer, costlier route, which could be potentially disruptive to Asian crude deliveries, he said Wednesday.