AP: Crude tumbles to 17-month low on global slowdown
Crude oil fell to a 17-month low in New York as plunging stock markets heightened concern that a global recession will slash fuel consumption.
Energy prices also dropped as the dollar rose to the highest in more than two and a half years against the euro, lowering the appeal of commodities such as oil as a currency hedge.
Prices later recovered slightly after Mohammad Ali Khatibi, Iran's representative to OPEC, said that it may make an additional output cut if its October 24 decision to lower production fails to bolster prices.
And Saudi Arabia's cabinet affirmed the kingdom's desire for a stable oil market while discussing OPEC's meeting last week, at which the group cut production for the first time in almost two years, the Saudi Press Agency reported.
The cabinet, in a meeting yesterday, affirmed the need to achieve "balance" in the oil market between the "interests of consumers and producers," SPA said, citing the minister of culture and information.
"Everyone is watching stock-market tickers and not OPEC," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "We want to see the full effect of the recession on demand, and until that happens prices will trend lower."
Crude oil for December delivery fell 86 cents, or 1.3pc, to $63.29 a barrel on the New York Mercantile Exchange, having earlier traded under $63 while in London Brent futures at one stage fell below $60 a barrel as futures touched $59.02, the lowest since February 22, 2007.
Prices are now 57pc below the peak reached in July, when crude traded at a record $147.27 a barrel. Investors looking for protection against the dollar's decline earlier this year helped lead crude oil, gold, corn and gasoline to records. On Currency markets yesterday the euro fell as much as 2.3pc to $1.2334, the weakest since April 2006, from $1.2623.
Oil is heading for a 37pc drop this month, the steepest since at least 1988 in New York.
The OPEC price basket, an average of 11 crude-oil grades sold by the group, dropped to $57.57 a barrel on October 24, the lowest since March 21, 2007.
The decline in the basket price "increases the likelihood that they will be forced to cut production again", said Addison Armstrong, market research director for Tradition Energy in Stamford, Connecticut.
