KUWAIT CITY, Oct 26: U.S. crude oil futures ended at a 17-month low on Friday afternoon as worries about a global recession overshadowed OPEC’s decision to cut output by 1.5mn barrels per day. An emergency OPEC meeting on Friday reached swift agreement to chop production by 1.5mn barrels per day (bpd) in an effort to halt a deep oil price slide. The 1.5mn bpd being removed from the September production ceiling of 28.8mn bpd includes 466,000 bpd less from top exporter Saudi Arabia and 199,000 bpd from Iran, the second biggest exporter. OPEC’s President Chakib Khelil of Algeria said OPEC would take further action if necessary before the next scheduled meeting in December in Oran, Algeria. He also said the total removed from the market by the end of the year would be closer to 1.8mn bpd as overproduction was eliminated. Saudi Arabia, the only OPEC member to be pumping significantly above target, has already reduced supplies slightly. It unilaterally increased its production when prices were racing to their July record. Criticize Washington was quick to criticize OPEC’s decision. “It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets and not by these kinds of antimarket production decisions,” White House spokesman Tony Fratto said. Moreover, the International Energy Agency called OPEC’s decision to cut output “unhelpful” and was too big. On the New York Mercantile Exchange, December crude settled down US$3.69, or 5.44 percent, at US$64.60 a barrel on Friday, the lowest since prices closed at US$64.01 on May 31, 2007. At the day’s low US$62.65, which was the weakest since US$62.43 was struck, also on May 31, 2007, prices have fallen US$83.12, or 56.44 percent, from the record US$147.27 hit on July 11. In London, December Brent ended down US$3.87, or 5.87 percent, at US$62.05 a barrel, the lowest settlement since March 21, 2007, when it closed at US$60.77. NYMEX November RBOB ended down 9.99 cents, or 6.33 percent, at US$1.4779 a gallon, trading from US$1.45, the lowest since prices struck US$1.4368 on January. 30, 2007, to US$1.6050. NYMEX November heating oil ended down 8.32 cents, or 4.1 percent at US$1.9465 a gallon, trading US$1.9111, lowest since prices hit US$1.9042 on June 13, 2007, to US$2.06. U.S. crude oil inventories rose last week for the fourth straight time as imports increased, and continuing weak demand boosted supplies of refined oil products. The Energy Information Administration said domestic commercial supplies of crude rose to 311.4mn barrels in the week to October 17, up 3.2mn from the previous week and above analysts’ expectations for a rise of 2.6mn. Imports rose 239,000 barrels per day to 10.4mn bpd. Stockpiles of gasoline increased by 2.7mn barrels to 196.5mn barrels last week, EIA said, very near analysts’ projections for a gain of 2.8mn barrels. Total gasoline output was off 203,000 bpd at 8.96mn bpd. However, total demand for the motor fuel over the past four weeks was 8.85mn bpd, down 4.3 percent from a year ago. Distillate stocks, which include heating oil and diesel, moved up 2.2mn barrels to 124.3mn barrels. But EIA also noted that demand for distillates over that past four weeks fell to 3.95mn bpd, or 5.8 percent below year-ago levels. New York Mercantile Exchange natural gas futures ended lower on Friday, as a sinking crude market and worries about a severe economic slowdown pressured the complex. November natural gas , which expires on Wednesday, slid 18 cents to close at US$6.239 permn British thermal units after sinking early to a 13-month spot continuation chart low of US$6.15. Traders agreed Thursday’s government report showing a 70 billion cubic feet weekly natural gas stock build was neutral, noting it was below the Reuters poll estimate of 76 bcf but above last year’s gain of 60 bcf and the five-year average increase for that week of 62 bcf. Spurred The dollar gained the most in 16 years against the currencies of six major U.S. trading partners as a global economic slowdown spurred demand for the greenback as a haven from losses in emerging markets. The dollar appreciated 6 percent to US$1.2622 per Euro this week, from US$1.3410 on October 17. The currency touched US$1.2497 per Euro, the strongest since October 2006. The yen rallied 7.8 percent to 94.36 per dollar from 101.69, and touched 90.93 yesterday, its highest level since August 1995. Weekly Y-T-D US ($) Close Performance Performace Oil - (WTI) 64.60 t -10.03% -32.99% Oil - (Brent) 60.96 t -8.25% -35.50% Gold/ounce 732.40 t -6.31% -12.41% U.S. The government may not be done trying to spend its way out of the economic crisis. Federal Reserve Chairman Ben Bernanke conceded that the sagging U.S. economy may need another jolt of billions of federal Dollars to ward off a deep and lengthy downturn. The U.S. economy shrank last quarter for the second time in a year as consumers and companies pulled back. GDP contracted at a 0.5 percent annual rate from July to September, the biggest drop since the 2001 recession, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures. The index of U.S. leading economic indicators unexpectedly rose in September, led by a surge in the money supply. The Conference Board’s gauge increased 0.3 percent after a 0.9 percent decline the prior month that was almost twice as large as previously estimated. The leading index was forecast to decline 0.1 percent, according to a Bloomberg News survey. The ABC News Consumer Confidence Index fell 5 points this week to -48 on its scale of +100 to -100. In a separate measure, a record high 82 percent say the economy is getting worse, an increase of 30 points from last month, the biggest month-to-month jump ever. The CCI, measured in a four-week-average, dropped sharply after weeks of financial upheaval, with the stock market plunging 18 percent and Congress pushing through a US$700bn package for Wall Street. US existing home sales rose by an unexpected 5.5 percent in September. The National Association of Realtors (NAR) said sales of existing homes and apartments were up 1.4 percent from a year ago, the first annual increase in three years. Sales rose to an annualized rate of 5.18mn units in August, beating analysts’ consensus forecast of 4.91 units. USA MBA mortgage applications for the week ending October 17 fell to its lowest level since 2000 as the credit crunch continues to take a toll on the world’s largest economy. Applications fell 16.6% to 408.1 from 489.3 in the previous week. The number of U.S. workers filing new claims for jobless benefits rose by 15,000 last week, the Labor Department said. Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 478,000 in the week ended Oct. 18 from a revised 463,000 the prior week. Weekly Y-T-D Close Performance Performace Dollar - Euro 1.2622 t -5.86% -13.91% Dollar - £ 1.5923 t -7.88% -19.86% Yen - Dollar 94.36 t -7.22% -15.33% Weekly Y-T-D Index Close Performance Performace US - DJ Average 8,378.95 t -5.35% -36.83% US - Nasdaq Comp. 1,552.03 t -9.31% -41.48% US - S&P500 876.77 t -6.78% -40.29% Europe The Euro zone budget deficit narrowed to 0.6% of GDP in 2007 to reach its lowest level in seven years, while the debt held by the government fell to 66.3% of GDP from 68.5% in 2006. Despite the improved data, market participants expected the deficit to widen significantly in 2008 as policymakers throughout the Euro zone bailed out distressed banks and financial institutions this year. The Euro zone’s purchasing managers’ index (PMI), compiled by Data and Research Group Market, slid to 44.6 in October from 46.9 in September, according to an initial estimate. Indicator The Euro zone business climate indicator is forecast to slip from -0.79 to -0.9, while consumer confidence in the monetary union is likely to have fallen to -21, two points below September’s figure. The economic sentiment indicator is expected to have lost 1.7 points to 86, while industrial confidence is forecast to have declined to -14 from -12 previously. Euro zone’s activity in both services and manufacturing sector has contracted further in October, according to preliminary Purchasing Managers’ Index estimates. Manufacturing PMI has contracted further in October, reaching a level of 41.3, down from 45.0 in September. Euro Area’s manufacturing activity, if figures are confirmed, has been going through contraction for the last four months. Services PMI has declined to 46.9 in October from 48.4 in September. GDP contracted 0.5% from the second quarter of 2008 to the third, according to flash estimates from the Office for National Statistics. Economists had forecast a less pronounced decline in GDP of 0.2% following Q2’s stagnate figure. On an annualized basis, GDP rose 0.3% in the third quarter, down from both the 0.5% gain expected and the previous quarter’s 1.5% rise. The Bank of England released its minutes from the last policy meeting. The minutes showed that the board unanimously approved (9-0) to lower interest rates by 50bps to 4.5%. Also, the minutes noted that economic activity has deteriorated substantially and stated that there have been increased arguments for the BoE to ease policy further as growth prospects falter. UK Prime Minister Gordon Brown admitted for the first time yesterday that the UK is heading for a recession, as share prices tumbled and the value of the pound hit a five-year low. The balance of manufacturers reporting a rise in new orders and those saying a decline stood at -30. The survey found 16% of manufacturers said an increase in new orders, while 46% responded they had fallen. Average asking prices rose by 1 percent this month, despite a 1.3 percent decline in house prices, because sellers are anticipating that potential buyers will attempt to secure reductions of as much as 25 percent off the market price. Figures from Rightmove showed that the average asking price has increased from GBP227,438 in September to GBP229,691 now. Forecast German producer price inflation unexpectedly accelerated in September. Producer prices rose 8.3 percent from a year earlier after increasing 8.1 percent in August. Economists forecast prices to gain 7.5 percent, according to a Bloomberg News survey. German retail sales hit a fiveyear low in August after dropping 2.5 percent. Activity levels in the German private sector economy declined for a second month running in October as the effect of the global financial crisis on market demand and business sentiment became more widespread. The seasonally adjusted Market Flash Germany Composite Output Index, based on at least 75% of normal monthly survey replies, fell from 48.5 in September to 46.7, its lowest level for over five years. Weekly Y-T-D Index Close Performance Performace England - FTSE 100 3,883.36 t -4.42% -39.86% Germany - DAX 4,295.67 t -10.16% -46.75% France - CAC 40 3,193.79 t -4.09% -43.11% Japan Japan has kept its benchmark lending rate at 0.5 percent, the lowest among major economies since February 2007. Japan’s merchandise trade balance in September was standing at JPY95.11bn - down 94.1 percent on year from JPY1.61tn. That was sharply lower than analyst expectations that called for a decline of 33.9 percent for a surplus of JPY546.1bn. The index monitoring overall industrial activity in Japan fell 1.8 percent in August, the Ministry of Economy, Trade and Industry announced. That was slightly worse than analyst expectations of a 1.7 percent monthly fall after a 0.8 percent jump in July. The leading index for Japan fell to a six year low of 89.3 points from 91.4 points in July, indicating that economic activity has deteriorated considerable since the first half of the year. Weekly Y-T-D Index Close Performance Performace Japan - Nikkei 225 7,649.08 t -12.02% -50.03% Japan - Topix 806.11 t -9.86% -45.37% Emerging Markets China GDP rose 9 percent in the third quarter from a year earlier, the statistics bureau said. That was less than any of the 12 estimates in a Bloomberg News survey and the 10.1 percent gain in the previous three months. Retail sales rose 23.2 percent in September, close to the fastest pace in at least nine years. Producer prices rose 9.1 percent last month, down from a 10.1 percent gain in August. Industrial production rose 11.4 percent in September, the slowest pace in more than six years excluding seasonal distortions on weaker export orders. India India’s central bank on October 20 unexpectedly cut its repurchase rate by 1 percentage point to 8 percent. It has also reduced the reserve requirement for banks three times this month to prop up growth. Wholesale prices rose 11.07 percent in the week to Oct. 11 from a year earlier after gaining 11.44 percent in the previous week according to the Commerce Ministry. Economists had expected an 11.35 percent increase. Weekly Y-T-D Index Close Performance Performace Hong Kong - Hang Seng 12,618.38 t -13.30% -54.63% Singapore - Straits Time 1,600.28 t -14.81% -54.05% Korea - KOSPI 938.75 t -20.49% -50.52% India - BSEN 8,701.07 t -12.77% -57.14% Pakistan - KSE 9,182.88 t -0.01% -32.81% Brazil - BVSP 31,481.55 t -13.51% -50.72% Mexico - INMX 513.62 t -14.35% -72.81% China - SSE180 3,994.78 t -3.59% -66.78% Russia - IRTS 549.43 t -17.70% -76.01%

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