Oil prices tumbled 14 percent the past two days as stock markets declined on signs that the U.S. recession will spread. Futures on the Chicago Board of Trade showed a 99 percent chance the Fed will cut its 1 percent target rate for overnight lending between banks by a half-percentage point at its Dec. 16 meeting to spur growth in the world’s biggest energy consuming country.
Crude oil for December delivery rose 27 cents, or 0.4 percent, to settle at $61.04 a barrel at 2:43 p.m. on the New York Mercantile Exchange. Futures touched $59.97, the lowest intraday price since March 22, 2007. Prices, which have tumbled 59 percent since reaching a record $147.27 on July 11, are down 37 percent from a year ago.
Rising fuel prices earlier this year helped cripple the U.S. automobile industry. While gasoline prices eased after peaking at more than $4 a gallon in July, companies weren’t able to recover because the freeze in debt markets sapped consumer confidence and made it harder for buyers to find loans.
General Motors Corp. said today that it may not have enough cash to keep operating this year and will fall significantly short” of the amount needed by the end of June unless the auto market improves or it raises more capital. Ford Motor Co. posted a third-quarter operating loss of $2.98 billion and said it used up $7.7 billion in cash.
Oil companies followed crude-oil futures higher. Exxon Mobil Corp., the world’s biggest oil company, rose 4.4 percent to $72.62. Chevron Corp. increased 2.6 percent to $71.90.
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, is due to meet on Dec. 17 to discuss production. Most of its 13 members have announced that they will implement an Oct. 24 resolution to slash output by 1.5 million barrels a day.
Daily shipments from OPEC to consumers in the U.S. and Europe will decline to their lowest in two years in the four weeks ending Nov. 22, following the group’s decision to cut output, industry consultant Oil Movements said yesterday.
Brent crude oil for December settlement declined 8 cents to settle at $57.35 a barrel on London’s ICE Futures Europe exchange.