Oil falls below $63 as investors eye weak demand

SINGAPORE – Oil prices fell to 17-month lows below $63 a barrel yesterday in Asia as investors brushed off oil cartel Opec’s output cut, focusing instead on growing evidence of a severe global economic slowdown that would undermine crude demand.

Light, sweet crude for December delivery declined $1,80 to $62,35 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Singapore yesterday, the lowest since May 2007. On Friday – even after Opec announced a 1,5 million barrel-a-day cut – oil fell $3,69 to settle at $64,15.Prices have plunged 57 per cent from a record $147,27 on July 11.”The mood is fairly negative reflecting worry about the international economic outlook,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.”If there is further weak economic data in the US or Europe, prices could come under more downward pressure.”Iran’s Opec governor, Mohammad Ali Khatibi, said on Sunday that a reduction in production “will be considered” at the group’s next meeting in Algiers in December – a meeting that might even be held early if necessary.”I thought the Opec cut was a fairly decisive act, but concerns of recession in the major economies remain dominant,” Moore said.”Opec’s cut does take a step toward tightening the market.”Investors have been paying close attention to signs that a slowing economy and higher petrol prices earlier this year have hurt crude demand in the US, the world’s largest oil consumer.The US Department of Transportation said on Friday that Americans drove 5,6 per cent less, or 24 billion fewer kilometers in August compared with same month a year ago – the biggest single monthly decline since the data was first collected regularly in 1942.Nampa-APOn Friday – even after Opec announced a 1,5 million barrel-a-day cut – oil fell $3,69 to settle at $64,15.Prices have plunged 57 per cent from a record $147,27 on July 11.”The mood is fairly negative reflecting worry about the international economic outlook,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.”If there is further weak economic data in the US or Europe, prices could come under more downward pressure.”Iran’s Opec governor, Mohammad Ali Khatibi, said on Sunday that a reduction in production “will be considered” at the group’s next meeting in Algiers in December – a meeting that might even be held early if necessary.”I thought the Opec cut was a fairly decisive act, but concerns of recession in the major economies remain dominant,” Moore said.”Opec’s cut does take a step toward tightening the market.”Investors have been paying close attention to signs that a slowing economy and higher petrol prices earlier this year have hurt crude demand in the US, the world’s largest oil consumer.The US Department of Transportation said on Friday that Americans drove 5,6 per cent less, or 24 billion fewer kilometers in August compared with same month a year ago – the biggest single monthly decline since the data was first collected regularly in 1942.Nampa-AP