Crude Oil Falls

Crude oil fell, heading for the lowest close in 21 months, as Japan entered its first recession since 2001 and China’s largest oil producer said demand had declined “sharply.”

Japan, the world’s third-biggest oil consuming country, contracted 0.4 percent in the third quarter, official figures today showed. China National Petroleum Corp., the nation’s biggest producer, said Nov. 15 that demand has fallen since September because of credit-market turmoil.

Crude oil for December delivery fell $1.85, or 3.2 percent, to $55.19 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures are heading for the lowest settlement since Jan. 29, 2007. Prices have tumbled 63 percent since reaching a record $147.27 on July 11.

Prices rose earlier because of colder U.S. weather and the hijacking of a Saudi Arabian tanker. Temperatures on the East Coast will be below normal from Nov. 22 to Nov. 26, according to the National Weather Service. A supertanker was hijacked by Somali pirates off the coast of Kenya, the U.S. Navy said.

The Saudi-operated Sirius Star was more than 450 nautical miles southeast of Mombasa when a group of pirates scaled the 10- meter (32-foot) side of the ship, U.S. Navy Lieutenant Nate Christensen said in a phone interview from Bahrain, where the Fifth Fleet is based. The tanker is designed to carry more than 2 million barrels of crude oil.

Chinese diesel imports dropped to 80,000 metric tons in October, the lowest in 14 months, and gasoline purchases declined to 31,533 tons from 122,850 tons in September, figures from the Customs General Administration of China show today. China’s overseas fuel purchases have fallen from July’s record when the country raised stockpiles before the summer Olympics Games.

Manufacturing in New York contracted in November at the fastest pace on record as orders and sales plunged. The Federal Reserve Bank of New York’s general economic index fell to minus 25.4, the lowest since records began in 2001, from minus 24.6 percent in October, the bank said today.

The Organization of Petroleum Exporting Countries reduced its forecast for average oil consumption next year by 530,000 barrels a day, or 0.6 percent, to 86.68 million barrels a day, according to its monthly oil market report. The International Energy Agency and U.S. Energy Department slashed demand projections last week.

Brent crude oil for January settlement declined $1.76, or 3.2 percent, to $52.48 a barrel on London’s ICE Futures Europe exchange., Bloomberg
11/17/2008 12:01:16 PM