Oil Falls Below $39 On Economic Gloom
Country: US
Author: Richard Valdmanis
A customer fuels her car with unleaded petrol at a Morrisons supermarket
in Coalville, central England, October 15, 2008.
Photo: Darren Staples
NEW YORK - Oil prices fell another 2.3 percent to below $39 a barrel on Tuesday as a raft of gloomy economic data reinforced expectations that world energy demand will shrink for the first time in 25 years.
OPEC, which has already agreed to slash global oil supplies by 5 percent, may call an emergency meeting before March if the market extends its nearly $110 barrel slide since summer, OPEC's President Chakib Khelil said on Tuesday.
"We will review the market again and make a proper decision if we see that prices still continue sliding despite the compliance," Khelil told Reuters.
U.S. crude for February delivery fell 93 cents to settle at $38.98 a barrel after dropping 6 percent on Monday. London Brent dropped by $1.09 to $40.36.
Tuesday's losses came after U.S. government data showed the economy of the world's biggest energy consumer shrank 0.5 percent in the third quarter as a credit and housing crisis took hold. Consumer spending, meanwhile plunged 3.8 percent, the biggest drop since 1980.
The UK economy also shrank 0.6 percent in the third quarter, the first decline there since the early 1990s, and data also showed recessions taking root in Spain and New Zealand.
"The bears appear to be in control, aided by weak equity markets as the global economic slump offers a depressive ring to the festive period," said Rob Laughlin, senior oil analyst at MF Global in London.
The U.S. Energy Information Administration expects world oil demand to shrink in 2008 and 2009 due to the financial turmoil, marking the first declines since 1983.
Robust demand from emerging markets such as China had pushed oil prices to their peak above $147 a barrel in July. Now even the dynamic Asian economies appear to be suffering.
Apparent oil consumption in China fell by 3.2 percent in November from a year ago, the first decline in nearly three years, Reuters calculations confirmed this week, while crude imports into the world's No. 2 energy consumer dropped to the lowest level this year.
Japanese exports, meanwhile, plunged at a record annual pace, according to government figures earlier this week.
(Editing by Christian Wiessner)
