Oil tumbles below $44 a barrel
Edward McAllister
Thursday, December 04, 2008
NEW YORK — Oil fell more than 6 per cent on Thursday to its lowest level in nearly four years in response to further bleak economic data that could spell a deeper decline in global energy demand.
The number of U.S. workers on jobless rolls hit a 26-year high last month, the government said, while another report showed U.S. factory orders fell sharply for the third month in a row.
U.S. light crude dropped $2.86 (U.S.) to $43.93 a barrel by early afternoon EST after slipping as low as $43.77 – the lowest since January, 2005. London Brent crude fell $2.87 to $42.57.
Oil prices have dropped more than $100 a barrel from record highs over $147 in July, as the global credit crunch has eaten into demand in large consumer nations.
“Relentless negativity is pressuring the oil complex,” said Mike Fitzpatrick, vice-president at MF Global.
U.S. stocks fell on Thursday as the continued fall in oil prices pushed down shares in energy companies including Exxon Mobil.
A Commerce Department report showed that factory orders in October plunged 5.1 per cent, the biggest drop since July, 2000, and a Labour Department report showed that the number of U.S. workers on jobless benefits rolls was the highest since December, 1982.
AT&T Inc. and DuPont Co. on Thursday led the list of blue-chip U.S. companies laying off workers in the weeks before the Christmas holidays.
European central banks cut interest rates on Thursday to try to restore some vitality to their feeble economies, many of which are already in recession.
Sweden's central bank cut by a record 175 basis points, the European Central Bank cut by 75 points and the Bank of England cut by 100 points.
Oil producer group the Organization of the Petroleum Exporting Countries will consider another round of output curbs to try to defend prices when it next meets on Dec. 17 in Algeria.
“It is obvious that the market is oversupplied,” said Iran's OPEC governor Mohammad Ali Khatibi. “If you remove oversupply and produce exactly what the market needs, it would be good for everybody.”
Oil rose briefly on Wednesday when U.S. Energy Information Administration data revealed an unexpected fall in fuel inventories last week in the world's top energy consumer.
But U.S. refinery utilization fell 1.9 percentage points to 84.3 per cent of capacity against a predicted rise of 0.2 percentage point, pointing to weak demand.
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