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Oil falls below $46 nearing four-year low

Oil falls below $46 nearing four-year low
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First Published: Thu, Dec 04 2008. 10 22 AM IST
Updated: Thu, Dec 04 2008. 10 22 AM IST
Singapore: Oil fell below $46 a barrel to near four-year lows on Thursday, extending four consecutive days of falls as continued demand worries minimised bullish draws in US oil stocks.
Oil prices have lost more than $100 a barrel since an all-time high of $147.27 hit in July, and some 16% from last week, as demand is seen weakening worldwide and analysts expect it to contract this year and next.
US light crude for January delivery fell 83 cents to $45.96 a barrel by 7:50am, off an earlier low of $45.75, the lowest since a $45.42 low hit on 10 February, 2005.
Oil settled down 17 cents at $46.79 on Wednesday.
London Brent crude edged down 34 cents to $45.10. “Stabilisation in macroeconomic expectations is likely to precede any switch in oil market sentiment away from a mainly demand-side focus,” Barclays Capital said in its weekly oil data review.
Bullish oil data on Wednesday pushed prices higher during the session, when the US Energy Information Administration said crude stocks fell 400,000 barrels in the week to 28 November, against an expected 1.7 million barrels build.
Distillate stocks, which include heating oil, fell 1.7 million barrels to 125 million, against a forecast for a 300,000-barrel increase, while gasoline supplies dropped 1.6 million barrels, having been expected to rise by 900,000 barrels.
But the product inventory falls came amid lower refinery utilization, which fell 1.9 percentage points to 84.3% of capacity last week against a predicted rise of 0.2 percentage point, showing weakening demand.
Worries about a deepening economic downturn resurfaced as a measure of the US service sector, which represents about 80% of US economic activity, slumped further than expected to a record low in November, according to the Institute of Supply Management.
The Institute said its non-manufacturing index came in at 37.3 versus 44.4 in October, and against expectations for a reading of 42.0.
Adding to the gloom, US private employers cut 250,000 jobs in November, a 7-year high, and US third-quarter labour costs were revised lower as the recession hit jobs.
Growing economic woes and falling prices have prompted oil producer group Opecto consider another round of cuts to oil output when it next meets 17 December in Algeria.
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First Published: Thu, Dec 04 2008. 10 22 AM IST
More Topics: Markets | Oil | Crude | Financial Crisis | US |