Singapore: Oil prices retreated below $90 a barrel on Wednesday as concerns about the global financial crisis will crimp demand for fuels overshadowed signs that producer group Opec was considering a supply cut.
The worst financial crisis since the Great Depression has heightened gloom about the global economy and weakened the outlook for oil demand, sending prices spiralling down nearly $60 since July.
US light crude for November delivery fell 71 cents to $89.35 a barrel after a more than $2 rise in the previous session. On Monday it hit an eight-month low.
London Brent crude fell 51 cents to $84.15 a barrel.
Underlining the impact of the financial crisis on fuel use, the US Energy Information Administration cut its oil demand growth outlook for next year by 15% from a forecast made last month, blaming the “deteriorating” global economy.
“I see the market falling to $86 in the next several weeks,” said Anthony Nunan, a risk management executive at Tokyo-based Mitsubishi Corp. “We need some stabilisation in the stock market or an Opec cut or both.”
Signs that members of the Organization of the Petroleum Exporting Countries (Opec) are becoming uneasy following oil’s recent sharp price drop failed to hold up prices on Wednesday, following a $2 a barrel rise in the previous session.
“If this volatility continues, Opec will have to do something,” Shokri Ghanem, chairman of Libya’s National Oil Corp, told Reuters on Tuesday.
Libya joined fellow Opec members Iran and Iraq in expressing concern this week about the impact of the crisis on oil demand.
Opec, which pumps two in every five barrels of oil, next meets in Algeria in December.
Further pressure on prices could come from US crude oil inventories data is due out later on Wednesday.
Crude stocks probably rose for the second week in a row last week as imports continued to rebound from storm disruptions, a Reuters poll of 11 analysts showed.