By Will Kennedy and Grant Smith Nov. 20 (Bloomberg) -- Brent oil, the benchmark that prices two-thirds of the world’s crude, fell below $50 a barrel for the first time since May 2005 as global energy demand slumped. Brent has crashed 66 percent from a record $147.50 a barrel on July 11 as the credit crisis spread through the global economy, cutting industrial output and consumer spending. The International Energy Agency expects world oil demand to rise at its slowest pace for 23 years in 2008 as the U.S., Europe and Japan face their first simultaneous recessions since 1945. “Oil at $147 was purely a speculative bubble,” Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd., said before prices breached $50. “It was cheap money chasing opportunities that were evaporating in other asset classes. What would bring it down further is any indication of demand growth being weaker than already dampened expectations.” Brent for January settlement fell as much as 3.7 percent to $49.80, the lowest since May 31, 2005, today on London’s ICE Futures Europe Exchange. The contract traded at $49.85 at 1:26 p.m. London time. Oil’s decline has accelerated. Crude fell 33 percent in October, the most in one month since at least 1988, as fuel demand dropped. U.S. fuel use during the past four weeks averaged 19.1 million barrels a day, down 7 percent from a year ago, an Energy Department report said yesterday. BASF SE, the world’s largest chemical company, lowered its 2008 profit forecast for the second time yesterday and plans to idle 80 factories after customers in the auto, construction and textile industries reduced orders. U.S. Stockpiles U.S. crude oil supplies rose 1.6 million barrels to 313.5 million barrels last week, the Energy Department said yesterday. Stockpiles were forecast to rise 1 million barrels, according to a Bloomberg News survey of analysts. Brent first rose above $50 on Oct. 11, 2004 in the middle of oil’s six-year rally toward this year’s records. Prices climbed on the strength of oil import demand from emerging economies, led by China, the world’s second-largest oil consumer, after the U.S. The IEA lowered its 2009 estimate by 670,000 barrels a day, or 0.8 percent, to 86.5 million barrels a day following weaker economic forecasts from the International Monetary Fund, it said in a monthly report last week. That’s the biggest reduction since 1996. The agency’s expectation that demand will expand next year remains more optimistic than those of some other analysts. Ian Taylor, chief executive officer of Vitol Group, said on Oct. 28 he expects a 1 million barrel decline in 2009. Wood Mackenzie Consultants Ltd. predicts a drop of 250,000 barrels a day. Oil prices may fall as low as $40 a barrel by April next year, Deutsche Bank AG said in a report yesterday. The Organization of Petroleum Exporting Countries potentially needs to cut production by 2.5 million barrels a day, to reduce output in an oversupplied market, the note said. To contact the reporter on this story: Will Kennedy in London at wkennedy3@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net.

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