MW: Crude falls 4% on economic worries, OPEC update
Petroleum cartel cuts 2009 growth forecast for global oil demand
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures plunged 4% early Wednesday, pressured by worries that the global financial crisis will lead to a sharp slowdown in economic growth and thus hurt demand for oil.
The Organization of Petroleum Exporting Countries revised lower its 2009 forecast, citing the negative impact of the ongoing turmoil in financial markets -- and adding to energy traders' concerns.
Crude for November delivery fell $3.44 to stand at $75.21 a barrel in electronic trading on Globex. The contract had dropped 3.2% to finish at $78.63 a barrel on Tuesday.
"Crude prices tracked financial markets lower amid concerns over weakening economic growth," said analysts at Sucden Research.
On Wall Street, U.S. stock futures pointed to a decidedly lower open, with Dow industrials futures falling 200 points. See Indications.
Demand growth for next year has been revised lower by 100,000 barrels a day, putting projected global growth at 800,000 barrels a day, the OPEC cartel said in its monthly oil market report published earlier Wednesday.
"In 2009, the reduced economic growth outlook is expected to continue impacting oil demand," OPEC said. "Hence, oil demand in the USA will be lower than initially expected, at least in the first half of the year. The likely spillover to other economies will affect oil demand elsewhere to some degree."
Earlier this month, OPEC said that it will hold an extraordinary meeting Nov. 18 to discuss the global financial crisis, the world economic situation and the fallout on the oil market.
Also Wednesday, Iran's oil minister said low oil prices will hurt investment in production capacity expansion projects, Reuters reported.
"I think the low price is a real damage to the future of production," minister Gholamhossein Nozari was quoted as saying. He also said that OPEC should try to achieve a balance between supply and demand at its Vienna meeting next month, the report said.
Also on the Globex, November reformulated gasoline fell 9 cents, or 5%, to $1.80 a gallon and November heating oil dropped 7 cents to $2.19 a gallon.
November natural gas futures sank 7 cents to stand at $6.66 per million British thermal units.
Glimpse ahead at supply data
Also on traders' radar screens, the Energy Information Administration will release its petroleum supply data on Thursday at 11 a.m. Eastern, a day late this week due to Monday's Columbus Day holiday.
Analysts at MF Global expect the data to show that crude supplies rose 3.75 million barrels for the week ended Oct. 10. They also expect to see weekly buildups in motor gasoline of 2.1 million barrels and in distillates of 1.1 million barrels.
On average, industry analysts surveyed by Platts are looking for an increase of 3.1 million barrels, each, for crude and gasoline supplies as well as an increase of 850,000 barrels for distillates.
The EIA will release its data on natural-gas supplies in storage as usual on Thursday at 10:35 a.m. Eastern. Analysts at Global Insight expect expanded supplies of 85 billion cubic feet for the week ended Oct. 10.
