Oil at 22-month low with demand under scrutiny

No Comments » November 17th, 2008 posted by // Categories: Energy Development Project






Oil at 22-month low with demand under scrutiny
U.S. industrial production climbs, but Japan’s economy enters recession

Polya Lesova, MarketWatch

Last update: 4:10 p.m. EST Nov. 17, 2008




SAN FRANCISCO (MarketWatch) – Crude futures closed at their lowest level in 22 months Monday, after an erratic trading session that took prices to a high near $59 per barrel, with energy demand under fresh scrutiny following a climb in U.S. industrial output and data showing that the Japanese economy has fallen into recession.




Prices managed to climb as high as $58.98 Monday in electronic trading on Globex. The contract had fallen around 2% on Friday to finish 6.6% lower for the week.




Industrial production increased 1.3% in October after falling a revised 3.7% in September, which was the biggest decline in 60 years.


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Its gross domestic product fell 0.1% in the July-to-September period from the previous quarter, or an annualized 0.4%, according to figures released Monday by the Cabinet Office.



Despite the severe losses in the oil market, with prices down more than 60% from their record level above $147 in July, there are some investors who are making money.








OPEC cuts estimates again


Meanwhile, in its November report on the oil market, the Organization of the Petroleum Exporting Countries cut its estimates for oil demand this year and next.


It revised lower its 2008 view by 260,000 barrels a day to show minor growth of 280,000 barrels a day. In 2009, it expects world oil demand to rise by more than 500,000 barrels a day, which is a downward revision of around 200,000 barrels.





But OPEC President Chakib Khelil said Sunday that the oil cartel may have to wait until December to take action to reach an oil price of $70 to $90 a barrel, since the impact of its latest supply cuts was not clear yet, according to a Reuters report.






Also on the Globex Monday, December reformulated gasoline closed down 6.5 cents at $1.1746 a gallon. December heating oil finished at $1.791 a gallon, down 4.1 cents.


December natural gas futures rose 22.1 cents, or 3.5%, to end at $6.533 per million British thermal units.



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Polya Lesova is a New York-based reporter for MarketWatch.

CRB) , a benchmark gauging the prices of major commodities, was at 243.84 points, down 1.5%. End of Story



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