Oil retreated, taking this month's decline to 36 percent, after the U.S. Commerce Department said yesterday that gross domestic product contracted in the third quarter at the biggest annual pace since 2001. Showa Shell Sekiyu K.K., Royal Dutch Shell Plc's Japanese unit, will cut its crude processing by 7 percent during the fourth quarter on falling domestic demand.
Crude oil for December delivery fell as much as $1.86, or 2.8 percent, to $64.10 a barrel. It was at $64.28 a barrel at 3:11 p.m. Singapore time on the New York Mercantile Exchange. Oil's monthly decline may pass February 1986 as the worst month ever, when it dropped 30 percent to $13.26 a barrel.
Prices, which have tumbled 56 percent from a record $147.27 on July 11, are down 32 percent from a year ago. Futures dropped $1.54, or 2.3 percent, yesterday to settle at $65.96 a barrel.
Oil climbed more than $4 a barrel on Oct. 29, the biggest gain in a month, after the U.S. and China, the two biggest energy consumers, cut interest rates to spur economic growth. Prices also rose because the dollar fell the most against the currencies of six major U.S. trading partners since 1998.
In Japan, the world's third-largest energy user, inflation slowed in September and employment prospects worsened. Showa Shell said today that it will process about 465,000 barrels a day from October to December, the company said in a statement today. Nippon Oil Corp., the nation's largest refiner, said yesterday it will continue processing less crude than a year ago.
China, the largest energy consumer after the U.S., cut interest rates this week after economic expansion in the third quarter slowed to the slowest pace in five years.
Monthly data for U.S. August fuel consumption, measured in terms of products supplied by refiners, dropped to 17.4 million barrels a day, according to the Petroleum Supply Monthly. That was down from 19.1 million barrels in August 2007.
U.S. fuel demand during the past four weeks averaged 18.9 million barrels a day, down 7.8 percent from a year ago, an Energy Department report showed Oct. 29. UBS AG yesterday cut its 2009 oil-price forecast by 43 percent to $60 a barrel from $105 because the global economic slowdown may reduce demand.
OPEC member countries seem to have ignored an agreement reached at a meeting in September to more closely adhere to its production quotas at the time.
The Organization of Petroleum Exporting Countries increased oil supplies 0.5 percent this month because of higher exports from Iraq, according to provisional data from Geneva-based consultants PetroLogistics Ltd.
The group supplied 31.85 million barrels of oil a day in October, up 150,000 barrels a day from September, PetroLogistics founder Conrad Gerber said in a telephone interview yesterday. Higher Iraqi output countered declines from Saudi Arabia, Kuwait and the United Arab Emirates.
OPEC agreed on Oct. 24 to reduce their production targets by 1.5 million barrels a day in an attempt to bolster falling oil prices. The OPEC basket price, a weighted average of 11 crude grades produced by the group, was at $58.13 a barrel on Oct. 29, down from a peak of $140.73 a barrel on July 3.
OPEC may curb only 850,000 barrels a day of oil supply by January, PFC Energy said in a report yesterday. PFC expects Saudi Arabia to cut 600,000 barrels a day, the Washington-based oil consultant said.
Brent crude oil for December settlement fell as much as $2.02, or 3.2 percent, to $61.69 a barrel on London's ICE Futures Europe exchange. It was at $61.84 a barrel at 3:17 p.m. Singapore time. Prices have fallen 32 percent in the past year.
Crude oil may rise next week on speculation that interest- rate cuts in the U.S. and China will bolster fuel demand and as traders buy on speculation of rally aft...