London: World oil prices tumbled on Wednesday to strike a four-year low point in London in volatile pre-Christmas trade as economic gloom weighed on the market, analysts said.
On London’s InterContinentalExchange (ICE), the price of Brent North Sea crude for February delivery tumbled as low as $38.63 (Rs1,893) per barrel—which was the lowest level since 29 December 2004.
Brent crude later stood at $38.7 a barrel, down $1.66 from the close on Tuesday. Light sweet crude for delivery in February shed $1.36 to $37.62 a barrel on the New York Mercantile Exchange.
New York crude for January had tumbled last Friday to $32.4—which was the lowest level since 9 February 2004—as investors raced to sell before the contract’s expiry. “Economic concerns continued to be the focus with expectations of further weakness in demand pushing prices lower,” said analysts at the John Hall Associates energy consultancy.
The price of crude oil has now collapsed by as much as 78% since it hit record highs above $147 per barrel in July, as a sharp global downturn slashed the?world’s demand for energy. On Wednesday, traders will digest the latest weekly update on energy inventories in the US, which is the world’s biggest crude oil consumer.
Analysts polled by Dow Jones Newswires expect crude oil stocks to have dipped by 200,000 barrels in the past week and distillates, which includes heating oil, to slip by 100,000 barrels. Latest US data showing that the world’s biggest economy remains mired in a recession is likely to keep crude oil prices under pressure in the immediate term, analysts said. “It is just more of the same on the economic front,” said Jason Feer, Singapore-based vice-president with energy market analysts Argus Media. “There is no sign of any economic recovery that will push up oil demand.”
The Organization of the Petroleum Exporting Countries, which produces about 40% 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 continued to plunge.
Analysts noted that the recent rise in oil stocks in the US caused New York prices to fall below their Brent counterpart in London, which is unusual.