Oil Falls Below $44

Crude oil fell below $44 a barrel to the lowest since January 2005 and gasoline dropped below $1 a gallon as the deepening recession in the U.S., Europe and Japan cuts fuel consumpt

Prices may dip below $25 a barrel next year if the recession spreads to China, Merrill Lynch & Co. said in a report today. U.S. fuel consumption during the four weeks ended Nov. 21 was down 6.2 percent from a year earlier, an Energy Department report showed yesterday.

Crude oil for January delivery fell $3.20, or 6.8 percent, to $43.59 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $43.51, the lowest since Jan. 6, 2005. Oil prices have tumbled 70 percent since reaching a record $147.27 on July 11.

Gasoline for January delivery declined 6.97 cents, or 6.7 percent, to 97.18 cents a gallon in New York. Futures touched 96.52 cents, the lowest since the contract was introduced in October 2005.

Pump prices have followed futures lower. Regular gasoline, averaged nationwide, dropped 1.4 cent to $1.789 a gallon, AAA, the largest U.S. motorist organization, said on its Web site today. It’s the lowest price since January 2005. The fuel has tumbled 57 percent from the record $4.114 a gallon reached on July 17.

Oil reached a then-record $41.15 in October 10, 1990, when Iraqi troops were occupying Kuwait. The milestone held until May 2004. Prices were last below $40 a barrel in July 2004.

Royal Dutch Shell Plc said that a fire broke out today at its Pernis refinery in the Netherlands, the largest in Europe. The blaze started at the gasoline-making catalytic cracker at the 416,000 barrel-a-day plant, the Rotterdam fire department said.

The four-week average of petroleum products supplied in the U.S. was 19.3 million barrels a day, down from 20.5 million barrels a day a year ago, yesterday’s report showed.

The U.S. Labor Department will probably say tomorrow that payrolls in November dropped the most since the 2001 terrorist attacks, a Bloomberg news survey showed. The U.S. entered a recession in December 2007, the National Bureau of Economic Research, a private, non-profit panel of economists that dates American business cycles, said on Dec. 1.

European Central Bank President Jean-Claude Trichet said the euro region’s economy will shrink next year for the first time since 2003.

Qatar’s oil minister said yesterday that the Organization of Petroleum Exporting Counties will definitely” cut output at its next meeting in Algeria on Dec. 17.

OPEC oil ministers agreed on Oct. 24 in Vienna that the 11 members with quotas would cut supply by 1.5 million barrels a day starting in November. Production by the 11, excluding Iraq and Indonesia, declined 725,000 barrels to 28.24 million barrels last month, according to data compiled by Bloomberg News.

U.S. crude-oil supplies fell 456,000 barrels to 320.4 million barrels last week, the Energy Department said yesterday. It was the first decline in 10 weeks.

Brent crude oil for January settlement fell $2.94, or 6.5 percent, to $42.50 a barrel on London’s ICE Futures Europe exchange. Futures touched $42.04, the lowest since Jan. 6, 2005.


TradingEconomics.com, Bloomberg
12/4/2008 11:51:50 AM