Oil plummets to $82 on global slowdown fears
- From: old.salt@xxxxxxxxxxxxx
- Date: Fri, 10 Oct 2008 01:58:41 -0700
SINGAPORE (AP) - Oil prices plummeted to a one-year low below $83 a
barrel Friday in Asia as investor fears of a severe global economic
downturn sparked a panicked sell-off of equities and crude.
Light, sweet crude for November delivery was down $4.00 to $82.59 a
barrel in electronic trading on the New York Mercantile Exchange by
midafternoon in Singapore, the lowest since October 2007. The contract
overnight fell $1.81 to settle at $86.62.
"The whole market has lost confidence in everything," said Mark
Pervan, senior commodity strategist with ANZ Bank in Melbourne.
"Everyone is worried about global growth, and oil is the front line
commodity for that. There's just a lot of panic and fear in the
market."
Investors have been unimpressed by interest rate cuts by the U.S. and
other leading central banks this week to help unclog the credit
markets and promote lending. A credit crisis that began last year in
U.S. sub-prime mortgages has spread across the globe, forcing
governments to spend hundreds of billions of dollars to bail out
banks, brokerages and insurance companies.
Japan's benchmark Nikkei 225 index plunged 9.6 percent Friday while
the Dow Jones industrial average fell more than 7 percent Thursday to
its lowest level in five years.
"The problem is no one really knows how far and deep this will go,"
Pervan said. "But we can see from the size of the rescue packages,
this is a really serious deal. This isn't a normal bear market."
Oil investors even ignored signs that the Organization of Petroleum
Exporting Countries may cut production. OPEC said Thursday it will
hold an extraordinary meeting Nov. 18 to discuss how the widening
global financial crisis is affecting oil prices.
On Thursday, the head of Libya's national oil company, Shukri Ghanem,
called on oil producing nations to cut output.
"OPEC is trying to jaw-bone the price up, but they'll have to come
into the market because no one is going to be believe just jaw-boning
with the market sliding so quickly," Pervan said. "The market is so
demand focused, it doesn't even care what happens to supply."
OPEC's decision last month to cut production by 520,000 barrels a day
failed to halt the losses, which have accelerated in recent days.
Oil prices have fallen about 44 percent since soaring to a record
$147.27 on July 11.
"We haven't seen the bottom of this yet," Pervan said. "We thought $75
would be a floor but if the market mood doesn't change, $50 to $60 a
barrel is not out of the question."
http://apnews.myway.com//article/20081010/D93NGRSG1.html
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