MW: Crude little changed after falling to three-year low
By Polya Lesova & Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures moved between gains and losses Tuesday, after slumping 9.4% in the previous session to the lowest in more than three years on worries about a sharp slowdown in energy demand.
Crude oil for January delivery was last down 33 cents, or 0.7%, at $48.95 a barrel on the New York Mercantile Exchange. Earlier, the contract hit an intraday low of $47.36 but also rose to as high as $50.25.
Crude's percentage loss on Monday, the biggest in more than seven weeks, sent the benchmark contract to the lowest closing level since May 2005. Crude is now about 66% lower than its record high of nearly $150 a barrel hit in July.
"Markets are increasingly concerned that the worldwide economic decline is too pronounced to be fixed any time soon and a worldwide recession will curtail energy demand," said analysts at Action Economics.
The U.S., the biggest oil consumer in the world, first entered a recession in December 2007, the National Bureau of Economic Research, which tracks economic cycles, said on Monday.
Oil demand could see an outright contraction of 0.5% next year as the global economy falls into recession, analysts at Merrill Lynch said in a report released late November.
The Organization of Petroleum Exporting Countries, which controls about 40% of the world's oil production, ended a weekend meeting in Cairo without any decision on a production cut. The cartel will meet next on Dec. 17 in Oran, Algeria.
OPEC President and Algerian Oil Minister Chakib Khelil said he expects oil demand to decline from a month ago, and said the group would take necessary action on Dec. 17 when it meets in Oran, Algeria.
OPEC Secretary General Abdalla Salem El Badri said Monday that crude prices in the range of $70-$90 a barrel would be "very reasonable."
"Incredibly, the grim global macro backdrop is not stopping various OPEC producers from throwing out 'fair' numbers for their oil, with prices between $70 to $90 being bandied about," said Edward Meir, an analyst at MF Global, in a researh note.
"The cartel would do well now to lower its sights to more realistic targets, and perhaps start thinking about living with $30-$40 oil," Meir said. "This is now a distinct possibility given the unprecedented global slowdown that has yet to fully manifest itself."
On Wall Street, U.S. stock futures advanced on Tuesday, a day after the fourth-sharpest point decline in the Dow Jones Industrial Average since the key index was created. See Indications.
Also in energy trading, January reformulated gasoline rose 1.4% to $1.1271 a gallon and January heating oil rose 1.5% to $1.6395 a gallon.
January natural-gas futures fell 0.8% to $6.551 per million British thermal units.
