BLBG: Oil Falls to 3-Year Low on Signs U.S. in Longest Post-War Slump
By Mark Shenk
Dec. 2 (Bloomberg) -- Crude oil fell to the lowest in more than three years on signs the U.S., the world’s largest energy consumer, may be in the longest slump since World War II.
Fuel demand has dropped as the U.S. economy slowed. The nation first entered a recession in December 2007, the panel of economists that dates American business cycles said yesterday. Prices are also lower because OPEC ministers put off debate on a second cut in output in as many months during a Nov. 29 meeting.
“We won’t see the oil market rebound until either OPEC makes a substantial production cut or the economy begins to recover and we start to see demand for refined products firm up,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Crude oil for January delivery fell $1.19, or 2.4 percent, to $48.09 a barrel at 11:33 a.m. on the New York Mercantile Exchange. Futures touched $47.36, the lowest since May 20, 2005. Oil prices have tumbled 67 percent since reaching a record $147.27 on July 11.
The Organization of Petroleum Exporting Countries, the International Energy Agency and U.S. Energy Department slashed demand projections in November because of the economic outlook. U.S. fuel consumption during the four weeks ended Nov. 21 was down 6.6 percent from a year earlier, the department said in a report last week.
“We are uncertain about how much OPEC will cut in two weeks,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “A lot of what happens depends on how deep this recession will go.”
OPEC Cut
Prices plunged more than 9 percent yesterday after OPEC’s Nov. 29 meeting in Cairo. OPEC will reduce crude production when it meets in Oran, Algeria, this month, OPEC Secretary General Abdalla el-Badri said yesterday.
“OPEC ministers are certain to enact a cut when they next meet,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. “Last week many producing countries said they were at the end of their tether, so yesterday must have added insult to injury.”
A U.S. Energy Department report tomorrow will show that crude-oil supplies rose 1.4 million barrels last week, according to the median of 11 responses in a Bloomberg News survey. It would be the 10th consecutive weekly gain.
Brent crude oil for January settlement declined $1.29, or 2.7 percent, to $46.68 a barrel on London’s ICE Futures Europe exchange. Futures touched $46.02, the lowest since Feb. 18, 2005.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
