Oil Falls to 19-Month Low

Crude oil fell below $59 a barrel in New York for the first time since March 2007, and gasoline tumbled, on speculation the International Energy Agency will cut its 2009 oil-demand forecast because of slowing economic growth.

The IEA, which coordinates energy policy in 28 developed countries, will reduce the estimated growth in global demand for a third month in a report tomorrow, according to four former IEA analysts. Energy prices also dropped because of declining equity markets and a rising U.S. dollar.

Crude oil for December delivery declined $2.98, or 4.8 percent, to $59.43 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $58.32, the lowest since March 20, 2007. Prices have tumbled 60 percent since reaching a record $147.27 on July 11.

Gasoline for December delivery declined 5.95 cents, or 4.4 percent, to $1.3084 a gallon in New York. Futures dropped to $1.2766 a gallon, the lowest since the contract began trading in October 2005.

Pump prices are following futures lower. Regular gasoline, averaged nationwide, declined 2 cents to $2.22 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. The fuel has tumbled 46 percent from the record $4.114 a gallon reached on July 17.

The IEA already has cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year. Last week, it published a summary of its annual World Energy Outlook, slashing its 2030 projection by 9.4 percent to 106 million.

The Organization of Petroleum Exporting Countries cited falling demand for its Oct. 24 decision to reduce production by 1.5 million barrels a day. OPEC ministers will discuss the market situation when they meet next on Dec. 17 and may agree to another supply cut then, the group's president, Chakib Khelil, said on Nov. 8 in Algiers.

Global stock markets declined as Credit Suisse Group AG said developed economies are headed for the worst recession since 1945. The Standard & Poor's 500 Index declined 5.22 points, or 0.6 percent, to 913.99. The Dow Jones Industrial Average fell 49.22, or 0.6 percent, to 8,821.32.

On Nov. 9, the Chinese government pledged spending to sustain economic growth through 2010 and switched to a ``relatively loose'' monetary policy. China is the world's fourth-biggest economy and the second-biggest consumer of oil.

Investors looking for protection against the dollar's decline earlier this year helped lead crude oil, gold, corn and gasoline to records. The euro fell as much as 1.9 percent to $1.2507 from $1.2748.

U.S. crude-oil supplies probably rose for a seventh week as imports rebounded, a Bloomberg News survey of analysts showed. Stockpiles probably increased 750,000 barrels in the week ended Nov. 7 from 311.9 million the week before, according to the median of 12 analyst estimates before an Energy Department report this week.

Gasoline stockpiles probably increased 200,000 barrels from 196.1 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1 million barrels from 127.8 barrels the week before, the survey showed.

The department is scheduled to release its weekly report on Nov. 13 at 11 a.m. in Washington. The report is being delayed by a day because of today's Veterans Day holiday.

Brent crude oil for December settlement decreased $3.38, or 5.7 percent, to $55.70 a barrel on London's ICE Futures Europe exchange. Futures touched $54.92, the lowest since Jan. 30, 2007.

TradingEconomics.com, Bloomberg.com
11/11/2008 11:49:41 AM