Oil falls back below 90 dollars
Thursday, 9 October 2008
SINGAPORE, Oct 8 (AFP): World oil prices fell back to below 90 dollars today as traders fretted over the global financial crisis and the resultant fall in energy demand, dealers said.
In afternoon trade New York's main contract, light sweet crude for delivery in November, was down 1.65 dollars to 88.41 dollars a barrel after climbing 2.25 dollars to 90.06 at the close of trading on the New York Mercantile Exchange Tuesday.
Brent North Sea crude for November eased 1.40 dollars to 83.26 dollars after rising 98 cents to 84.66 Tuesday in London.
"It's all doom and gloom on the demand side," said Tony Nunan, a manager with Mitsubishi Corp's international petroleum business in Tokyo. "The economy looks like it's going to get worse before it gets better."
Asian shares sank further Wednesday after the Dow closed at a five-year low overnight. A vicious downward spiral was reinforced by fears of a deeper credit crunch leading to severe recession.
Japanese shares plunged 9.38 per cent, the biggest loss in more than two decades, while Australian shares closed down 5.0 per cent and South Korean stocks ended 5.81 per cent lower.
Oil prices have dropped from record highs above 147 dollars in early July, and hit eight-month lows below 90 dollars Monday.
But prices picked up Tuesday after Libya, an OPEC member, called on crude producers to cut output to protect their incomes.
"We are very much worried about this drop of the price," said Libyan Energy Minister Shukri Ghanem.
In September, OPEC decided to cut its production by 520,000 barrels of oil per day.
Phil Flynn at Alaron Trading downplayed the impact of any reduction in OPEC output.
"Even if they cut production, the market might not care" beyond a few days of rallying because demand would not be sustainable, Flynn said.
"Economies in turmoil will not pay artificially high prices for oil for very long and consumption would fall," he said.
A US Department of Energy (DoE) monthly report Tuesday said New York crude oil prices were expected to average 112 dollars a barrel in 2008 and 2009.
The prior 2009 estimate was 126 dollars a barrel.
Later Wednesday the DoE was to release its regular weekly report on oil inventories in the United States, the world's biggest energy consumer.
In afternoon trade New York's main contract, light sweet crude for delivery in November, was down 1.65 dollars to 88.41 dollars a barrel after climbing 2.25 dollars to 90.06 at the close of trading on the New York Mercantile Exchange Tuesday.
Brent North Sea crude for November eased 1.40 dollars to 83.26 dollars after rising 98 cents to 84.66 Tuesday in London.
"It's all doom and gloom on the demand side," said Tony Nunan, a manager with Mitsubishi Corp's international petroleum business in Tokyo. "The economy looks like it's going to get worse before it gets better."
Asian shares sank further Wednesday after the Dow closed at a five-year low overnight. A vicious downward spiral was reinforced by fears of a deeper credit crunch leading to severe recession.
Japanese shares plunged 9.38 per cent, the biggest loss in more than two decades, while Australian shares closed down 5.0 per cent and South Korean stocks ended 5.81 per cent lower.
Oil prices have dropped from record highs above 147 dollars in early July, and hit eight-month lows below 90 dollars Monday.
But prices picked up Tuesday after Libya, an OPEC member, called on crude producers to cut output to protect their incomes.
"We are very much worried about this drop of the price," said Libyan Energy Minister Shukri Ghanem.
In September, OPEC decided to cut its production by 520,000 barrels of oil per day.
Phil Flynn at Alaron Trading downplayed the impact of any reduction in OPEC output.
"Even if they cut production, the market might not care" beyond a few days of rallying because demand would not be sustainable, Flynn said.
"Economies in turmoil will not pay artificially high prices for oil for very long and consumption would fall," he said.
A US Department of Energy (DoE) monthly report Tuesday said New York crude oil prices were expected to average 112 dollars a barrel in 2008 and 2009.
The prior 2009 estimate was 126 dollars a barrel.
Later Wednesday the DoE was to release its regular weekly report on oil inventories in the United States, the world's biggest energy consumer.