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By Mark Shenk

Oct. 22 (Bloomberg) — Crude oil fell more than $4 a barrel to a 15-month low as weakening fuel consumption outweighed prospects of a production cut by OPEC at a meeting this week.

The global financial crisis, which helped send U.S. fuel use to the lowest since 1999, is spreading to emerging markets. OPEC, supplier of more than 40 percent of the world’s oil, will decide on Oct. 24 to lower output by at least 1 million barrels a day, according to a Bloomberg survey.

“The market is more concerned about the economy than anything else,” said Tom Bentz, senior energy analyst at BNP Paribas in New York. “Until there is a recovery of the financial system and the economic picture, oil will trend lower, even if OPEC makes a cut of 1 million barrels plus.”

Crude oil for December delivery declined $4.25, or 5.9 percent, to $67.93 a barrel at 11:18 a.m. on the New York Mercantile Exchange. Futures touched $67.50, the lowest since June 27, 2007. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, are down 14 percent from a year ago.

Argentina’s planned seizure of $29 billion of private pension funds stoked concern the nation is heading for its second default in a decade. President Cristina Fernandez de Kirchner‘s decision hurt markets already reeling from slumping commodity prices and slower growth.

China’s gross domestic product increased 9 percent in the third quarter from a year earlier, the weakest pace in five years, as the slowdown in the U.S. and other markets saps demand for Chinese products. China is the world’s biggest oil consumer, after the U.S.

Asian Growth

“I think the economic news from Asia is knocking the last leg from under the bulls,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We’re now getting evidence that China isn’t immune to the financial crisis after all.”

Fuel demand in the U.S. averaged about 18.7 million barrels a day during the four weeks ended Oct. 17, down 8.5 percent from the same period a year earlier, according to an Energy Department report released today at 10:35 a.m. in Washington. Consumption in the four weeks ended Oct. 10 was the lowest since June 1999.

“The projections of a deep economic slowdown are scary,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Demand for every segment of the oil barrel is going to take a hit.”

Gasoline Demand

U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, the report showed. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 3.9 million barrels a day, down 5.8 percent.

“The industrial slowdown will reduce use of diesel, people will cut back on discretionary driving, hitting gasoline demand, there will be less travel, hitting jet fuel demand, and there will be less shipping, which hits bunker-fuel demand,” Mueller said.

Crude oil inventories rose 3.18 million barrels to 311.4 million barrels, the report showed. It was the fourth-straight increase. A gain of 2.65 million barrels was forecast, according to the median of responses by analysts in a Bloomberg News survey.

The Organization of Petroleum Exporting Countries may disregard pleas from oil-consuming nations on the brink of recession and cut output this week, a Bloomberg survey showed.

Thirty of 33 analysts surveyed this week forecast that OPEC will lower production by 1 million barrels a day or more at the meeting in Vienna, which was brought forward from November. That’s more oil than Australia consumes. OPEC also may signal plans for an additional reduction of at least 500,000 barrels a day by early 2009.

Brent crude oil for December settlement fell $3.40, or 4.9 percent, to $66.32 a barrel on London’s ICE Futures Europe exchange. Futures touched $65.28, the lowest since May 10, 2007.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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