Oil prices fell to a 5 1/2 month low Thursday, testing the $100-a-barrel mark, as the market remained focused on slumping demand and the stronger dollar while watching the threat Hurricane Ike poses to the Texas Gulf Coast.
U.S. crude for October delivery settled down $1.71 to $100.87 a barrel as floor trading ended in New York. It was the lowest settle price since March 24, when oil ended the day at $100.86.
Oil fell as low as $100.10 during trading.
The concern over falling demand is not limited to the U.S. "Traders are worried about falling demand in Europe, South America and even Asia," said Lebow. "And Asia has really been the engine of any demand growth." With demand in a free fall, oil producers decided to curb overproduction.
On Wednesday, the Organization of the Petroleum Exporting Countries announced that it would return to oil production levels from last September, about 28.8 million barrels of oil a day. Given that OPEC member countries have been overproducing, ignoring established quotas, the move by OPEC to adhere to those allotments means a decline of roughly 520,000 barrels of oil per day.
Oil price below $101
Crude futures are at their lowest point in almost half a year