Oil hits 1-year low on fears of demand slump

Oil hits 1-year low on fears of demand slump
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First Published: Fri, Oct 10 2008. 08 54 AM IST
Updated: Fri, Oct 10 2008. 08 54 AM IST
Singapore: US crude oil futures tumbled by more than $4 a barrel on Friday, extending losses to fresh one-year lows, as traders feared the credit crisis would send the global economy into recession and hurt fuel demand.
US light, sweet crude for November delivery fell $4.26 to $82.33 a barrel, having earlier fallen to $82.10 a barrel.
Oil prices earlier fell by $3 to a fresh one-year low below $84 a barrel, as fears that market turmoil will send demand for fuel slumping outweighed news that Opec will hold an extraordinary meeting in November.
With the financial crisis now almost a month old, Japan’s Nikkei stock index plunged 11% on Friday, while the yen and gold rose on growing concerns that no government effort so far has kept the global economy from a path to recession.
Investors, who earlier this year piled into oil and other commodities as a hedge against inflation and the weak dollar, are putting cash into safer havens and have sent oil plummeting by more than $60 from its record high above $147 in July.
US light crude for November delivery fell $2.77, or 3.2%, to $83.82 a barrel, just above its earlier low of $83.78 and extending oil’s more than $20 drop during the past two weeks alone.
London Brent crude shed $2.26 to $80.40 a barrel, matching the previous session’s 12-month low.
“The decline in oil prices was despite Opec indicating that it will hold an extraordinary meeting on 18 November,” said David Moore, a commodity strategist at Commonwealth Bank of Australia.
Opec said it will hold the emergency meeting in Vienna to discuss the impact of the financial crisis on the oil market.
The statement came after calls from Opec ministers this week for action to halt a slide in oil prices.
Investors will also look to Washington, where finance ministers and central bankers from the Group of Seven major industrial nations will meet amid expectations that the group will present a united front on policy to contain the crisis.
The International Energy Agency (IEA) releases its monthly report on the oil market at 0900 GMT, and investors are expecting another cut in demand expectations for this year and next.
The slumping economy has already prompted analysts to revise downwards their global oil demand growth target, with the US Energy Information Administration this week dropping its 2009 projection by 140,000 barrels per day.
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First Published: Fri, Oct 10 2008. 08 54 AM IST
More Topics: Markets Crisis | US | Oil | Crude | Prices |