We had pointed out that usage of oil had dropped over 10% during the first oil shock. While the price hike itself led directly to conservation, and this time we have an easing price environment, global economic conditions were not as difficult as today’s.
Crude oil fell below $59 a barrel in New York for the first time since March 2007, and gasoline tumbled, on speculation the International Energy Agency will cut its 2009 oil-demand forecast because of slowing economic growth.
The IEA, which coordinates energy policy in 28 developed countries, will reduce the estimated growth in global demand for a third month in a report tomorrow, according to four former IEA analysts. The euro-area economy will probably contract 0.7 percent next year, Morgan Stanley said in a report.,,,
Crude oil for December delivery declined $3.40, or 5.5 percent, to $59.01 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures touched $58.32, the lowest since March 20, 2007. Prices have tumbled 60 percent since reaching a record $147.27 on July 11.
Gasoline for December delivery declined 8.28 cents, or 6.1 percent, to $1.2851 a gallon in New York. Futures dropped to $1.2766 a gallon, the lowest since the contract began trading in October 2005….
“The view of the market is very pessimistic,” said Addison Armstrong, director of market research for Tradition Energy in Stamford, Connecticut. “The only news I foresee that can move prices higher is a cold spell, which would boost heating oil demand, and that would have only limited impact.”
The IEA already has cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year. Last week, it published a summary of its annual World Energy Outlook, slashing its 2030 projection by 9.4 percent to 106 million.
The Organization of Petroleum Exporting Countries cited falling demand for its Oct. 24 decision to reduce production by 1.5 million barrels a day. OPEC ministers will discuss the market situation when they meet next on Dec. 17 and may agree to another supply cut then, the group’s president, Chakib Khelil, said on Nov. 8 in Algiers.
“This is a tough time for OPEC because of the demand picture,” Mueller said. “Every time they cut production they are building up spare capacity. There’s also a risk that they may make cuts and prices still won’t rebound.”…
Gasoline stockpiles probably increased 200,000 barrels from 196.1 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1 million barrels from 127.8 barrels the week before, the survey showed.
The department is scheduled to release its weekly report on Nov. 13 at 11 a.m. in Washington. The report is being delayed by a day because of today’s Veterans Day holiday.
Brent crude oil for December settlement decreased $3.63, or 6.1 percent, to $55.45 a barrel on London’s ICE Futures Europe exchange. Futures touched $54.92, the lowest since Jan. 30, 2007.