Oil slid below $37 a barrel on Wednesday, heading for a fall of 60% in 2008 as the global economic slowdown bit deep into energy demand.
Oil slid below $37 a barrel on Wednesday, heading for a fall of 60% in 2008 as the global economic slowdown bit deep into energy demand. Crude oil hit an all-time high of more than $147 in July but prices have collapsed in the last six months as the credit crisis has pushed the industrialized world into recession. Dismal data from the United States on Tuesday added to pessimism that oil demand will suffer further in 2009, countering any support from Middle East tensions and hopes for another Saudi output cut. Analysts forecast an average of $49 a barrel for U.S. crude in the first quarter, and an average of $58.48 for next year, down $14 from their previous forecasts, the latest poll showed.
U.S. crude oil futures for February dropped to a low of $36.94 per barrel, down $2.09, before recovering slightly. By 6:30 ET, the contract was at $37.53, down $150.
"We expect energy prices to remain on the defensive through the early weeks of the New Year, presuming of course that the fighting in the Middle East does not spill over into other countries," MF Global said in a note to clients.
Oil jumped as much as 12% on Monday after Israel launched its air offensive on Gaza but prices slipped back quickly and analysts said they saw very little risk of the conflict disrupting oil supplies from the Gulf.
Foreign powers have stepped up calls on the warring parties to call an immediate ceasefire.
The market focus is on the deteriorating economy.
Data: The United States saw its worst job market in 16 years hammer consumer confidence to a record low in December, the shopping season was the worst since at least 1970, and prices of U.S. single-family homes in October fell a record 18% from a year earlier.
U.S. retail gasoline demand for the week ending Dec. 26 dropped 3.8% from the same week a year ago, as drivers tightened their belts over Christmas, a MasterCard survey showed.
Weekly U.S. inventory data due later on Wednesday will give more clues on the impact on oil use.
A poll of analysts forecast U.S. crude stocks fell by 1.5 million barrels last week, while distillate inventories rose by 1.1 million and gasoline increased by 1.5 million.
Top OPEC exporter Saudi Arabia is set to cut oil supplies further in February, market sources said on Tuesday, potentially taking output below its agreed OPEC target.
With oil coming off more than $100 from its record peak mid-year, the Organization of the Petroleum Exporting Countries has announced its biggest-ever production cut of 2.2 million barrels per day to fight the price slide.
The group already has cut output three times in an effort to remove about 5 percent of world supply.