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London: Oil prices fell on Wednesday to their lowest in 13 months, dragged down by expectations that economic weakness will cut further into demand for crude.
US crude was down $3.76 a barrel at $74.87 by 1504 GMT. It touched a session low of $74.62, its lowest since September last year.
London Brent crude was $4.03 down at $70.50 a barrel.
Stock markets also fell sharply and the dollar weakened against the yen as global recession fears returned to centre stage after governments around the world pledged trillions of dollars for bank bailouts.
A weak performance from US retailers provided evidence of the slowdowon.
The retailers suffered their biggest monthly drop in sales in more than three years in September.
Recession in the world's top consumer the United States and other key markets could further dampen oil demand.
The Organisation of Petroleum Exporting Countries (Opec) cut its forecasts for world demand for crude next year in its latest monthly report. "Even if governments are successful in calming equity markets and unfreezing credit markets in the near future, the fallout on the real economy from financial market headwinds is expected to be considerable," it said.
Opec is due to hold an emergency meeting in Vienna next month to review the impact of the global financial crisis on the oil market.
The impact of the credit crisis has contributed to around a 50 per cent drop in oil prices from a record peak in July above $147 a barrel.
Forecast
JP Morgan cut its forecast for average oil prices next year to $74.75 a barrel, citing the weak economic outlook.
"The oil market is caught in the wake of four tsunamis," the US bank said. "A global recession, tighter credit, increased refining capacity and rising non-Opec supplies."
Traders will closely watch weekly US inventory data today for indications on US oil demand. Analysts in a Reuters poll expect increases in crude and oil product products.
The data is forecast to show a 1.9 million barrel build in crude stocks, a 600,000 barrel build in distillates and a 2.9 million barrel rise in gasoline inventories last week.
Bullion: Gold leaps 2%
Gold leapt more than two per cent yesterday, reversing earlier losses, as a slide in US equity markets prompted funds to buy bullion as a haven from risk.
At the same time, silver fell five per cent, platinum nearly five per cent and rhodium more than 20 per cent as fears about the global economic outlook added to the perception that demand will fall for precious metals that have an industrial use.
Spot gold was at $843.20/$845.70 an ounce at 1439 GMT, up from $835.25 in late New York trade on Tuesday. Earlier it touched a session high of $856.10.
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