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SINGAPORE—Crude
oil fell to an eight-month low in New York as
consumption weakens in the US and other developed
nations amid a worsening credit crisis that’s
restraining economic growth.
Oil
dropped to its lowest since February 7 as global stock
markets tumbled on concern the credit crisis will topple
more banks and slowing growth will cut demand. US
gasoline demand dropped 9.5 percent last week, according
to MasterCard Inc., and falling consumption prompted the
Energy Department to cut its oil price forecasts on
Tuesday.
“Demand
destruction is prevalent in developed countries with
consumption falling at about 3 percent to 4 percent,”
said Tobias Merath, a commodity analyst at Credit Suisse
Group in Singapore. “The credit crunch is forcing
traders to deleverage their positions as they have no
access to credit.”
Crude
oil for November delivery fell as much as $2.69, or 3
percent, to $87.37 a barrel in electronic trading on the
New York Mercantile Exchange, and traded at $88.15 a
barrel during the mid-afternoon session Wednesday in
Singapore.
Futures
have declined 40 percent from the record $147.27 reached
July 11. On Tuesday, crude oil rose $2.25 to $90.06 a
barrel in New York.
Asian
stocks plunged, driving the Nikkei 225 Stock Average to
its biggest drop since October 1987, and US futures fell
on concern the credit crisis will topple more banks and
slowing growth will cut demand for exports.
The
stock market decline has spurred concern that growth
will slow and crimp demand for fuels. The Standard &
Poor’s 500 index slid 60.66 points, or 5.7 percent on
Tuesday, to 996.23, extending its 2008 tumble to 32
percent in the market’s worst yearly slump since 1937.
The Dow Jones Industrial Average dropped 508.39, or 5.1
percent, to 9,447.11, giving it a 29-percent retreat in
2008, the worst in 71 years.
Credit
“conditions are unlikely to improve significantly in the
next few weeks or months, commodities prices may very
well remain under pressure in the near future,” Goldman
Sachs Group Inc. commodity research analysts including
Giovanni Serio and Jeffrey Currie said in a report on
Tuesday.
US
motorists bought an average 8.625 million barrels of
gasoline a day in the week ended October 3, down from
9.536 million a year earlier, MasterCard, the
second-biggest credit-card company, said on Tuesday in
its SpendingPulse report. It was the 24th consecutive
weekly decline, and the biggest since September 2005,
after Hurricane Katrina sent pump prices to records.
The drop
comes as tightening credit markets, bank failures and
rising unemployment claims may indicate that the US is
entering a recession, curtailing fuel consumption.
West
Texas Intermediate crude oil, the US benchmark, will
average $112 a barrel in 2008, the Energy Department
said in its monthly Short-Term Energy Outlook. The
forecast is down 3.3 percent from $115.81 a barrel
estimated last month, the report from the department’s
Energy Information Administration showed.
US oil
demand will average 19.8 million barrels a day this
year, down 830,000 barrels a day from 2007. This year’s
demand forecast was reduced 270,000 barrels from last
month.
Demand
among the 30-member Organization for Economic
Cooperation and Development (OECD) will fall 1.07
million barrels to 48.07 million barrels a day, the
Energy Department said.
The OECD
doesn’t include developing countries such as Brazil,
China and India. Consumption by non-OECD countries will
rise 1.4 million barrels a day to 38.07 million barrels.
(Bloomberg) |
