Business | Oil & Gas
Crude oil price plunges below $70
Crude oil futures fell below $70 a barrel on Thursday after a US government report showed a bigger-than-forecast increase in inventories.
- Bloomberg
- Published: 00:11 October 17, 2008
New York: Crude oil futures fell below $70 a barrel on Thursday after a US government report showed a bigger-than-forecast increase in inventories.
Supplies rose 5.6 million barrels to 308.2 million barrels in the week ended on October 10, the Energy Department said Wednesday in a weekly report. Inventories were forecast to rise 2.6 million barrels, according to the median of analyst estimates.
Crude oil for November delivery fell $4.50, or 6 percent, to $70.04 a barrel at 11:14am on the New York Mercantile Exchange. Oil fell as low as $69.15 a barrel after release of the supply report.
Oil also fell on doubts that the rescue plan for banks will be enough to bolster global economic growth and fuel use. Industrial production in the US fell in September by the most in almost 34 years as hurricanes and an aircraft strike combined with the credit crunch to weaken manufacturing.
Lower forecast
Credit Suisse Group and Sanford C. Bernstein & Co. slashed their oil-price forecasts for next year as tightening credit conditions and slowing economic growth eroded fuel demand.
Bernstein lowered its forecast to $70 a barrel from $90 in 2009 and cut the 2010 estimate to $80 from $95 a barrel, according to a report Wednesday. Zurich-based Credit Suisse reduced its next-year estimate by 32 per cent to $75.
The "ideal" price for crude oil is between $70 and $90 a barrel, Organisation of Petroleum Exporting Countries (Opec) President Chakib Khelil said on Thursday.
Opec hasn't decided the size of an output cut it may opt for at a meeting in Vienna. "No one can say how much," said Khelil, who is also Algeria's oil minister.
Opec said on Wednesday it had brought forward an emergency meeting to discuss the impact of global recession on oil markets to next Friday.
Pressure has been mounting within the group to reduce supplies as oil prices have fallen by around 50 per cent from an all-time high of $147.27 hit in July.
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