Oil dropped as low as $87.56 a barrel in New York as European leaders pledged to bail out troubled banks and protect depositors and the dollar rose against the euro. OPEC President Chakib Khelil said today the price slide will continue next year.
Crude oil for November delivery fell $6.07, or 6.5 percent, to settle at $87.81 a barrel at 2:46 p.m. on the New York Mercantile Exchange. Earlier, it touched the lowest since Feb. 7. Futures have fallen 40 percent from the record $147.27 reached July 11.
New York oil prices declined 12 percent last week as reports showed U.S. fuel demand the previous four weeks was the lowest in almost seven years and manufacturing shrank in September at the fastest pace since the last recession in 2001. The Labor Department reported a bigger-than-expected 159,000 drop in payrolls in September last week.
The dollar rose to the highest since August 2007 against a basket of currencies, reducing the investment appeal of dollar- denominated commodities. The euro fell as low as $1.3444, from $1.3772 Oct. 3, after Germany said it will guarantee personal bank deposits, in a bid to stabilize the nation's banking system.
Saudi Aramco, the world's largest state oil company, cut its prices to Asia and the U.S. The company trimmed the price of its Arab Extra Light crude by 30 cents to a discount of $3.40 a barrel below the West Texas Intermediate benchmark, the Dhahran, Saudi Arabia-based producer said yesterday in a faxed statement. The company also cut the price of its Arab Light grade.
Brent crude oil for November settlement fell $6.57, or 7.3 percent, to $83.68 a barrel on London's ICE Futures Europe exchange, the lowest closing price since Oct. 23, 2007.
Gasoline for November delivery fell 16.92 cents, or 7.6 percent, to $2.0591 a gallon, the lowest settlement price since Oct. 10, 2007. It touched $2.053 a gallon in intraday trading. Gasoline is down 43 percent from a record $3.631 on July 11.
Regular gasoline at the pump, averaged nationwide, dropped 2 cents to $3.504 a gallon, according to AAA, the nation's largest motorist organization. The price has fallen 15 percent from a July record.
Heating oil for November delivery fell 18.8 cents, or 7.1 percent, to $2.4740 a gallon in New York, the lowest close since Feb. 7.
Gold rose the most in two weeks on demand for a haven as the credit crisis deepened in Europe. Silver dropped. Gold futures for December delivery rose $33, or 4 percent, to $866.20 an ounce on the Comex division of the New York Mercantile Exchange. That marked the biggest percentage gain for a most-active contract since Sept. 22. The metal reached a record $1,033.90 on March 17.