Oil Approaches $50 Per Barrel

Crude oil fell for a fifth day, approaching $50 a barrel, as the contracting world economy increases concerns that demand for fuels will slow.

U.S. fuel use during the past four weeks averaged 19.1 million barrels a day, down 7 percent from a year ago, an Energy Department report said yesterday. The MSCI Asia Pacific Index dropped for a fourth day, down 3.7 percent to 76.30. The Dow Jones Industrial Average yesterday fell to the lowest since March 2003.

"Everyone is looking at the demand and seeing it as a reason to sell,'' said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. "People are looking at the Dow as an indication of how the economy is doing.''

Crude oil for December delivery fell as much as 80 cents, or 1.5 percent, to $52.82 a barrel on the New York Mercantile Exchange at 10:35 a.m. Singapore time. Yesterday, futures touched $52.79 a barrel, the lowest since Jan. 23, 2007.

Oil has dropped 64 percent since reaching a record $147.27 on July 11. Yesterday, December futures fell 77 cents, or 1.4 percent, to $53.62 a barrel, the lowest settlement since Jan. 22, 2007. The more active January futures contract was down 63 cents, or 1.2 percent, at $53.47 a barrel. December futures expire at the close of trading today.

Exports from Japan, the world's largest oil importer, declined at the fastest pace in almost seven years in October as the global financial crisis intensified, stifling overseas demand.

Exports, the main engine of Japan's economic growth in the past six years, fell 7.7 percent from a year earlier, the biggest drop since December 2001, the Finance Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted an 8 percent drop.

Singapore's economy probably shrank last quarter as a manufacturing slump and easing demand for financial services drove the nation into its first recession since 2002. The island city-state is Asia's biggest oil trading center.

Gross domestic product declined an annualized 6.3 percent from the second quarter, after shrinking 5.7 percent in the previous three months, according a Bloomberg survey. That matches last month's initial estimate by the government, which will release the revised data at 8 a.m. tomorrow.

Slipping oil and commodity prices caused the stocks for explorers and producers to decline. Woodside Petroleum Ltd. fell 5 percent to A$32.25, its lowest price in three years. Cnooc Ltd., plunged 40 Hong Kong cents, or 7.2 percent to HK$5.14 a share in trading today.

Prices also fell as U.S. crude oil inventories climbed as demand for fuels slipped.

Crude-oil supplies rose 1.6 million barrels to 313.5 million barrels last week, the Energy Department said yesterday. Stockpiles were forecast to rise 1 million barrels, according to a Bloomberg News survey of analysts.

Gasoline inventories rose 539,000 barrels to 198.6 million barrels in the week ended Nov. 14, the report showed. Analysts surveyed by Bloomberg News were split over whether supplies of the motor fuel increased or declined.

U.S. fuel demand fell 5.2 percent in the first 10 months of this year, the biggest drop since 1981, the American Petroleum Institute said in a report yesterday.

Brent crude oil for January settlement fell as much as 82 cents, or 1.6 percent, to $50.90 a barrel on London's ICE Futures Europe exchange. It was at $51.10 a barrel at 10:48 a.m. Singapore time. The contract yesterday declined 12 cents to $51.72 a barrel, the lowest settlement since Jan. 11, 2007.

Author: Jo Amey