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Oil dips below $75 as OPEC cuts demand forecast
(Agencies)
Updated: 2008-10-16 10:30 A global economic slowdown caused by a seize-up in world credit markets is forcing consumers and businesses around the world to cut back on energy use. US and European leaders this week announced plans to pump billions of dollars into the beleaguered banking system to jump start lending, though experts say the damage to the wider economy has already been done.
The OPEC report reflected the extent of the downturn in developing countries while showing that appetite for crude remained robust elsewhere. While total oil consumption dropped in developed countries by more than 1 million barrels a day as of September over a 12 month period, demand growth from developing countries increased by a daily 1.2 million barrels over the same time, OPEC said. The US plans to spend as much as $250 billion this year of a $700 billion bailout buying stock in private banks. Governments across the globe have pledged more than $3 trillion to prop up ailing banks in a bid to stabilize a credit crisis that began last year in the US sub-prime mortgage market. Worries about a recession are strengthening expectations that crude prices still have some way to go before they bottom out. Trader and analyst Stephen Schork suggested that $50 "is now within the realm of possibilities." Investors are also watching for signs of slowing US demand in the weekly oil inventories report to be released Thursday from the US Energy Department's Energy Information Administration, a day later than usual because of the Columbus Day holiday. The petroleum supply report was expected to show that oil stocks rose 3.1 million barrels last week, according to the average of analysts' estimates in a survey by energy information provider Platts. The Platts survey also showed that analysts projected gasoline inventories rose 3.1 million barrels and distillates went down 850,000 barrels last week. Crude stocks have grown as oil installations in the Gulf of Mexico began operating again after being shut down by Hurricane Ike last month. "There is some demand destruction in that forecast, but there's also hangover from the hurricane as refineries come back on line," said Gerard Rigby, an energy analyst at Fuel First Consulting in Sydney. In other Nymex trading, heating oil futures fell 7.12 cents to settle at $2.217 a gallon, while gasoline futures fell 10.26 cents to settle at $1.7822 a gallon. Natural gas futures for November delivery fell 18.8 cents to settle at $7.136 per 1,000 cubic feet. |
