OPEC Output Cut Fails To Stop Oil From Sliding Below $62

SINGAPORE — Oil prices fell to 17-month low around $62 a barrel Tuesday in Asia on investor concerns a global economic slowdown could worsen, further undermining demand for crude.

Light, sweet crude for December delivery fell 87 cents to $62.35 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore after trading as low as $61.75. The contract fell overnight 93 cents to close at $63.22, the lowest settlement since May 29, 2007.

"It's quite a severe slowdown that's been priced in already," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "I thought in June and July the only way we would get below $80 was if there was a macroeconomic collapse, and it seems that that's what we're seeing."

Oil investors have been taking a cue from a plunge in global stock markets that suggests major economies are headed for a significant recession over the next 12 months. Oil prices have fallen 58 percent since reaching a record $147.27 on July 11.

The Dow Jones industrial average fell 2.4 percent Monday after credit ratings agency Moody's Investors Service downgraded General Motors Corp.'s credit rating further into "junk" status, citing a sharp contraction of the U.S. auto market. The Standard & Poor's 500 index fell 3.2 percent.

In early trading on Tuesday, Asian stock markets were mixed, with key indices in Japan and Australia down but Hong Kong and Thailand gaining after both of those markets fell more than 10 percent Monday.

"If the credit market remains tight and the recession worsens, we could certainly go into the $50s and even below $50, but that would be an overshoot to the downside," Kornafel said.

Prices have fallen despite a production quota cut of 1.5 million barrels a day by the Organization of Petroleum Exporting Countries last week. OPEC officials have said the group, which controls about 40 percent of global crude oil production, may cut output again at a meeting in December.

"It doesn't matter what OPEC does or other supply news, people are just so focused on demand and getting their money out of trades that no longer make money," Kornafel said. "There's no real attention being paid to fundamentals in the short-term. It's still the panic."

In other Nymex trading, gasoline futures fell 1.68 cent to $1.46 a gallon and heating oil fell 0.28 cent to $1.91 a gallon. Natural gas for November delivery fell 1.8 cents to $6.10 per 1,000 cubic feet.

In London, December Brent crude was down $1.21 to $60.20 a barrel on the ICE Futures exchange.

Comments

[manitoumackinac]

I think it allows people to see how much OPEC really doesn't matter that much. The price gets inflated after it leaves the Middle East.

[MarkBoston]

I keep my car parked on the street most of the time now and take the bus or the T (Trolley) into the city daily now. I am use to it even now that gas has come down to a more reasonable price range. I am doing My bit for the environment and its not bad at all ( at most times ) less gas and parking costs.

[strangerinthenight]

PS: Can thet get my IP address ?

[strangerinthenight]

I've learned OPEC history in college. How they bully the West by curtailing oil production. Gas have effectively reduced my disposable income. 'wish I could stay in college forever where my Mom and Dad were responsible for my car payment, gas and insurance too and no bills to pay.

OPEC issued yet another pronouncement of curtailing oil production. Surprise ! Surprise ! Even with that latest bully-tactics, oil prices are diving south - still.

Maybe the consumers are fed up, we are now curbing our driving habits. I am. Times are bad, 'am forced change my spending habit - driving less. It's my guess, but less consumption maybe the answer, or, at least one of.

Which comes to mind - Russia. They must be hurting. Their economic boom comes from Oil revenues. Russia's only leverage against the West is OIL. Without that precious commodity, Russia could not afford Military build up. I wonder what Putin is thinking now ? Huge loss of revenues, they have to curtail military arsenal - ARMS - MISSILES . It will stop their occupations. 'am not sure how much Russia's RESERVES is, but relying on Newsweek and Times, but it can't be more than 1 trillion total. Russia's leadership is entrenched with corruption. Ours too, but maybe not to that extent. Wall Street could be worse.

Relying on that, there's not an immediate danger from Russia's Putin or his puppet President. Well, at least not on the immediate future. But Putin is still dangerous.

Can

[CaptD]

1. Let's start filling up the National reserves at discounted prices.

2. Let force the filling stations to lower the prices as fast as they raise them...

3. Let's start a national gasoline Company that will compete with Exxon & Chev...

[TxAggie]

1. You are referring to the Strategic petroelum Reserve (SPR), yes that makes sense.

2. Let's force the filling stations to lower the prices as fast as they raise them-that is with no regard to the price they pay or their inventory on hand- so how does that work.

3. A national gasoline company to compete with Exxon and Chevron- in what arena- Exxon is selling their gas stations. Refining, E&P, Chemicals? Who is we? What's stopping you?

[radnip]

Let's get off oil. We only have 5% of the world's oil and we use 26% of the world's oil supply. Where in that does it say if we nationalize oil, we'll have our own oil supply? NOWHERE.

We must get off imported oil. It is imperative for our economic survival and our national security. It's a shame that the "Country First", the "U.S.A", and the flag-pin wearers don't get that!

[Huffybuff]

Can anyone say Deflation? This is the baby boomer long-wave cycle, and its deflationary. Oil is sinking, along with house prices, the stock market, agriculture prices, cars and just about everything else.

[marijam]

Why is gasoline the cheapest in the nation in Wichita, Kansas? Around $2.50? Is it because of the refinery in Oklahoma? Why isn't the gas cheapest in the city where the refinery is?

[oldGunny]

Gas Taxes, state and local.

[jsarets]

"Americans drove 5.6 percent less, or 15 billion fewer miles, in August compared with same month a year ago"

WOW... Assuming an average of 12,000 miles per vehicle per year, eliminating 15 billion miles per month is the equivalent of taking 15 million cars off the road! We're really making significant incremental progress toward curbing the combustion of fossil fuels. All it takes is the right pricing signals from the market.

[darthdarcy]

It's not based upon supply or demand it never was...and 5.6% if it is even that high would not equalize this gargantuan drop in prices..!

It was all the criminal manipulation of the Futures market behind the spike in prices..!

[davidwayneosedach]

Hopefully this low price oil/bbl will stanch some of the force of the recession.

[Drew2011]

Oil is not where the money is in the future. Internet domains are. Go to www.drew2011.ws and get rich off of domain rights.

[rextrek]

All I know is my Personal Gas consumption has been cut over 1/2....with my new Toyota Yaris 2008 I get 38-40MPG - and USED TOO spend 120$month on gas for my Ford F150 (which I got rid of) - my last bill was 38$ for the month!

[francoise]

well done, you save a lot, and moreover you polute less !

[studlyguy]

For every virulent upward trend from Greedy manipulating companies and countries and Greedy W a l l Street types speculating ,there will be virulent downward from all the manipulating and speculating,and now with the world's economies in economic depression that will be the case for years to come so there better get use to it both W a l l street and oil companies and countries,ever notice it goes up in everyday 5 to 10cents when it's going up,but when it's coming down it's very ,very slow2 to 4 cents every other week, how interesting.

[helen]

Sow the wind. Reap the whirlwind.

[Sumocat]

Conserve, baby, conserve!

[MCTSilverlakeCA]

Regarding the price of gasoline... California has several refineries and we pay more than most of you do for gasoline by at least 40 cents higher a gallon...a little of that goes to our higher air quality standards - but not much... the rest is pure profit... it's also an old system for keeping prices higher .. it's rather like selling Florida grapefruit in California and California grapefruit in Florida... it's the same fruit really - but by shipping it long distances it keeps the prices up and that means more profits for Big Business. . another boondoggle we need to put a stop to! Want to cut your grocery prices? Look for co-operative farmer's markets - fresh, local produce that doesn't go through a lot of processing, fancy packaging, and national tv advertising that you pay extra for that lines Big Business's Corporate Pockets so they can keep giving those $25 million dollar Golden Parachutes to outgoing executives...

[metalpipe]

It's not pure profit. We have one of the highest state gas taxes in the nation. Plan on it going up in the near future.

[radnip]

Start demanding cars that at least DOUBLE your present gas mileage! You'll HALF your fuel costs. And start keeping money from going to the Russians, Arabs, Venezuelans, and whatever other model ideal regime has oil reserves!

[MCTSilverlakeCA]

glaze has the right idea... get back at Big Oil and OPEC by not buying any more gas than you absolutely have to ... learn to walk again to local shops, good for the waistline and blood sugar levels , great for America!

The real reason we are fighting over there anyway is to protect our Oil Companies big Investments in the Middle East. We're spending hundreds of billiions of dollars on War to protect these investments and these are the same companies that Mr. McCain and Mr Bush give tax cut's to! This just increases their profits at our expense!

We presently use 25% of the world's supply of oil - we need to cut down not only on gasoline consumption, but also on products made from it. Petroleum is part of many things we use every day that we don't even think of ... it's not only in asphalt and gasoline, but also in many clothing types which are spun from plastics which come from oil, other things such as ink, crayons, bubble gum, eyeglasses, tires, records, .dishwashing liquids, counter top cleaners also contain petroleum. Substitute natural products instead - like plain old white vinegar for many of your cleaning solutions, it's cheap it's great on cutting grease and dirt, and great for the Economy.

GO NATURAL, GO GREEN, not only in using less gasoline, but be careful of what you buy ... buy American wherever possible so that the money that we spend stays here in America