Oil Prices Drop Amid Falling Demand For Energy
Thursday, September 11, 2008 at 4:13 pm Under Business News 7 views
LONDON:Oil prices fell on Thursday as demand for energy decreased around the world owing to a global economic slowdown.
Prices had risen earlier in the day as Hurricane Ike headed toward key energy facilities on the southern US coast and after OPEC on Wednesday reduced output to curb falling prices, analysts said.
Brent North Sea crude for delivery in October dropped 56 cents to 98.41 dollars a barrel.
New York’s main contract, light sweet crude for October, slid 51 cents to 102.07 dollars.
Concerns about oil demand in a slowing global economy were highlighted by the latest monthly report from the International Energy Agency (IEA), which cut its estimate for global oil demand this year by 100,000 barrels per day and in 2009 by 140,000 bpd.
The IEA monthly report, published Wednesday, highlighted shrinking oil demand in North America, saying consumers mainly in the United States are cutting back energy use in response to high prices.
The same day, the US Department of Energy said that stockpiles of distillates, which include heating fuel, had dropped by 1.2 million barrels in the week ended September 5. The consensus forecast was for a bigger decline of 2.2 million barrels.
Distillates are being watched closely by the market ahead of the northern hemisphere winter.
With oil prices falling below 100 dollars per barrel this week, oil producer group OPEC decided to cut production to prevent a further drop, despite an economic crisis in consumer countries.
“It looks like they are willing to defend 100 dollars (as a floor),” Mike Wittner, an analyst at Societe Generale, commented following OPEC’s decision.
Oil prices topped a record 147 dollars in July but have since fallen some 30 percent, dropping below the symbolic 100-dollar mark for the first time in five months on Tuesday.
The Organization of Petroleum Exporting Countries reacted to the fall by cutting its daily output by 520,000 bpd.
Oil prices had risen in Asian trading on Thursday as Ike strengthened to a Category Two storm in the Gulf of Mexico and headed toward the southern US coast after ravaging Cuba and the Caribbean.
In anticipation of Ike, Anglo-Dutch oil giant Shell evacuated personnel from offshore installations. The bulk of US oil refineries are in the Gulf of Mexico.
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