10 October 2008

Crude drops to $ 75 rolled by the crash and melting of demand

Crude drops to $ 75 rolled by the crash and melting of demand

Oil, which collapsed under $ 80 a barrel in New York and touched $ 75 in London Friday after the commencement of trading on Wall Street continues to push the price thresholds while demand prospects in shrivelling eyes.

Towards 14H30 GMT, a barrel of Brent North Sea for delivery in November s'échangeait to 78.43 dollars, down 4.23 dollar from its closing price on Thursday evening.

At the same time, a barrel of light sweet crude "for the same period was 79.96 dollars, losing 6.63 dollars on the New York Mercantile Exchange (Nymex).

Fell under 80 dollars in London during Asian trade, oil prices plunged in turn below this threshold in New York after the disastrous opening on Wall Street, which fell more than 6% and crossed the bar 8000 points for the first time since April 2003.

While all global bourses were again won by panic, oil plunged to 75 dollars in London and 78.61 dollars in New York, the lowest for a year.

Compared to its historical records from 11 July to over 147 dollars, oil dropped nearly half (49%) of its value.

"Oil prices move in affinity with the market action when lowering the morale of weak financial markets. Until credit conditions will normalize, it is unlikely that oil prices will disconnect the low Market action, "said Harry Tchilinguirian, an analyst for BNP Paribas.

But the collapse of the stock does qu'attiser fears on the oil market: driving the crude price floors as to deteriorate as economic growth prospects, and with them, forecasts Application of energy.

"Weak demand this summer in most OECD countries face a high price per barrel is now relayed by Outlooks economic mast and a financial crisis could put in recession OECD economies" Where demand is expected to fall 2.2% in 2008, has underlined the International Energy Agency (IEA) in its monthly report released Friday.

Knowing this, the Agency has again lowered its forecast for global demand for 2008 and 2009 respectively to 86.5 million barrels per day (MBD) and 87.2 MBD. Global demand for oil should grow again this year, but barely: +0.5% or 0.4 MBD.

For some observers, prices are now too low, even taking into account the decline in demand in industrialized countries.

"The exchange market are based on the fear that swept the reality of supply and demand", believes unanimously Khamar, the brokerage Sucden, which is expected to further price cuts .

"In a general negative climate, even market players who think that raw materials have fallen too low reluctant to buy for fear of being swept by a new wave of liquidations," he says.

The fall in prices alarm oil producers, who see their incomes melt at high speed when they suffer a sharp rise in production costs.

Faced with the threat, the Organization of Petroleum Exporting Countries (OPEC) announced it would hold an emergency meeting on November 18 in Vienna, "to discuss the global financial crisis and its impact on the oil market ". Evidence suggests that it will lower its production to adjust to a request shaky.

The market however seems to doubt the effectiveness of a response. "Why would they market OPEC seriously when dominoes collapse in the world?", And has interviewed Phil Flynn of Alaron Trading.

by erectusplus at 17:23:00 |

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