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What's Down With Oil? 3 Month low
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Oil fell to its lowest price in three months briefly dipping to $111 levels after the US dollar appreciated and OPEC predicted the world's thirst for fuel next year will fall to its lowest point since 2002. (Largely stemmed by the substitutes and reduction of consumption in the US)
Light, sweet crude for September delivery fell $1.24 to settle at $113.77 a barrel on the New York Mercantile Exchange after falling to $111.34, its lowest price since May 2 and more than $35 -- or 24 percent -- below its July 11 trading record above $147.
As high energy costs force countries around the globe to cut back on consumption, crude prices have plummeted and are now within striking distance of $100 a barrel, a level first reached Feb. 19.
Crude fell after the dollar gained strength against the euro on U.S. data showing that industrial output rose more than expected in July. The 15-nation euro has lost some of its luster compared to its American rival amid growing evidence that European economies are slowing. The euro bought $1.4675 in trading Friday, down from $1.4811 late Thursday.
An OPEC forecast of lower demand also put downward pressure on prices.
In its monthly oil report, the organization forecast world appetite for oil this year overall will fall by 30,000 barrels a day. While forecasting demand growing by a daily 1 million barrels a day this year, and another 900,000 barrels in 2009, the report noted that world demand growth next year will also be "the lowest since 2002," with demand growth from the major industrialized countries actually declining.
The OPEC report came two days after the U.S. DOE highlighted the ongoing drop in U.S. demand for energy as Americans struggle with high costs for gasoline, food and other goods.
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econmod
Broker
/ Moderator
Aug 16, 2008, 1:42 PM
Post #1 of 4
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