Thursday December 04, 2008

NYMEX crude oil falls below $46 on deepening economic slowdown

news.yahoo.com :

Crude oil prices fell below $46 a barrel to its lowest in nearly four years on Thursday [4 Dec 2008], extending 4 consecutive days of falls as continued demand worries minimized bullish draws in US oil stocks. Oil prices have lost more than $100 a barrel since an all-time high of $147.27 hit in July, as demand is seen weakening worldwide and analysts expect it to contract this year and next. NYMEX crude oil prices for Jan 2008 delivery fell to $45.30, the lowest since a $44.60 low hit on 9 Feb 2005.

Worries about a deepening economic downturn resurfaced as a measure of the US service sector, which represents about 80% of US economic activity, slumped further than expected to a record low in November, according to the Institute of Supply Management. The Institute said its non-manufacturing index came in at 37.3 versus 44.4 in October. Adding to the gloom, US private employers cut 250,000 jobs in November, a 7-year high. Growing economic woes and falling prices have prompted OPEC to consider another round of production cuts to oil output when it next meets December 17 in Algeria.

- It looks like we are still playing the game of "How low will it go?" - but at these prices, it's a fair bet that a number of oil producers will have to start shutting down or go into negative profit margins. The tar sands operations are reputed to have operating costs of around $80 per barrel and in fact the oil sands companies have already shelved expansion plans. Even within OPEC itself, some member nations such as Iran and Venezuela are said to have operating costs as high as $70-80 per barrel, and both the Saudi king and Saudi oil minister are on record as saying that they seek a minimum $75 target price for crude oil. Expect fireworks ahead.

See also :

1. NYMEX crude oil drops below $60 on demand destruction concerns
2. NYMEX crude oil drops below $50 on global economic slowdown
3. Peak Oil : IEA reports global depletion rate could go up to 9.1%, struggle to produce crude oil
4. Global credit crisis slows food and energy shipments, may lead to shortages
5. NYMEX crude oil falls more than $100 from Jul 2008 record on US recession, OPEC production cut delay

(2008-12-04 18:36:35 SGT) [Energy] Permalink

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