Oil prices slump to fresh lows on weak economic outlook
Friday, 26 December 2008
NEW YORK, Dec 25 (AFP): World oil prices tumbled yesterday to new four-year lows in volatile pre-Christmas trade as economic gloom weighed on the market, analysts said.
Light sweet crude for delivery in February shed 3.63 dollars to close at 35.35 dollars a barrel on the New York Mercantile Exchange, the ninth consecutive drop in prices.
On London's InterContinental Exchange, Brent North Sea crude for February delivery fell 3.75 dollars to settle at 36.61 dollars a barrel, the lowest since July 2004.
Analysts said the declines were driven by worries about a global recession that saps energy demand.
"The economic data remains decidedly weak," said John Kilduff at MF Global.
The latest reports from the United States confirmed ongoing grim conditions.
In the first decline in four months, personal income contracted 0.2 per cent in November, surprising analysts who had expected no change.
Consumption expenditures shrank 0.6 per cent in the month before Christmas, its fifth consecutive decline, according to the Commerce Department.
Kilduff said oil markets are pricing in a continued decline in economic activity.
"The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcends reality," he said.
The market shrugged off a decline in US inventories of 3.1 million barrels, which normally would cause a rise in prices.
New York crude for January had plunged last Friday to 32.40 dollars-lowest reading since February 9, 2004 -- as investors raced to sell before the contract's expiry.
Analysts said that recent US data showing that the world's biggest economy remains mired in a recession was likely to keep crude oil prices under pressure in the immediate term.
The Organization of the Petroleum Exporting Countries, which produces 40 per cent of the world's crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market. However, prices have continued to slide.
The price of crude oil has now collapsed by as much as 78 per cent since hitting record highs above 147 dollars per barrel in July, as a sharp global downturn has slashed the world's demand for energy.
Light sweet crude for delivery in February shed 3.63 dollars to close at 35.35 dollars a barrel on the New York Mercantile Exchange, the ninth consecutive drop in prices.
On London's InterContinental Exchange, Brent North Sea crude for February delivery fell 3.75 dollars to settle at 36.61 dollars a barrel, the lowest since July 2004.
Analysts said the declines were driven by worries about a global recession that saps energy demand.
"The economic data remains decidedly weak," said John Kilduff at MF Global.
The latest reports from the United States confirmed ongoing grim conditions.
In the first decline in four months, personal income contracted 0.2 per cent in November, surprising analysts who had expected no change.
Consumption expenditures shrank 0.6 per cent in the month before Christmas, its fifth consecutive decline, according to the Commerce Department.
Kilduff said oil markets are pricing in a continued decline in economic activity.
"The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcends reality," he said.
The market shrugged off a decline in US inventories of 3.1 million barrels, which normally would cause a rise in prices.
New York crude for January had plunged last Friday to 32.40 dollars-lowest reading since February 9, 2004 -- as investors raced to sell before the contract's expiry.
Analysts said that recent US data showing that the world's biggest economy remains mired in a recession was likely to keep crude oil prices under pressure in the immediate term.
The Organization of the Petroleum Exporting Countries, which produces 40 per cent of the world's crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market. However, prices have continued to slide.
The price of crude oil has now collapsed by as much as 78 per cent since hitting record highs above 147 dollars per barrel in July, as a sharp global downturn has slashed the world's demand for energy.