Oil Hits 8-Month Low Under $90 A Barrel

Speculators Fear Growing Financial Crisis Will Slow Economies, Sap Demand

(CBS/AP)  Oil prices fell to an 8-month low below $90 a barrel on speculation that the spreading financial crisis will exacerbate a global economic slowdown and cut demand for crude oil.

Light, sweet crude for November delivery was down $4.69 to $89.19 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

Oil prices have tumbled nearly 40 percent since peaking in July. The Nymex front-month contract last traded this low in early February.

The drop came as world stock markets plunged amid growing investor anxiety that the U.S. bad debt crisis is enveloping Europe. Germany announced Sunday a bailout package totaling 50 billion euros ($69 billion) for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks.

"What happened over the weekend was further evidence of the spread of this financial crisis to Europe," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This deepens the sentiment that we're going to see a more widespread economic slowdown or even recession, and that's no good for oil demand."

Investors shrugged off Friday's approval by the U.S. House of Representatives of a $700 billion bailout package to buy bad mortgage debt, aimed at stabilizing the U.S. financial system.

Oil demand in the world's richest countries had already begun to slow since May, before the worst of the financial turmoil hit the United States last month, Shum said.

"The rescue plan should keep a complete financial meltdown from occuring," Shum said. "But the demand data is not encouraging. In the developed countries it's falling, and that's why we're seeing downward pressure on prices."

Investors will be watching if the Organization of Petroleum Exporting Countries moves to cut output should prices fall further.

Iranian Oil Minister Gholam Hossien Nozari said Saturday that it would be "unsuitable" for both producers and consumers for oil to dip below $100 a barrel. He called on fellow OPEC members not to pump too much oil and avoid a drop in prices.

"OPEC has signaled it may defend $80," Shum said. "There's uncertainty over what OPEC may do."

Traders were also watching currency movements as investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but sell crude as the U.S. currency strengthens.

The 15-nation euro fell to $1.3590 in trading Monday from 1.3774 late Friday while the dollar dropped to 103.35 yen from 105.30 on Friday.

In other Nymex trading, heating oil futures fell 12.28 cents to $2.5392 a gallon, while gasoline prices dropped 9.83 cents to $2.13 a gallon. Natural gas for November delivery fell 17.2 cents to $7.186 per 1,000 cubic feet.

In London, November Brent crude fell $3.80 to $86.40 a barrel on the ICE Futures exchange.

[mk12343]

if thats the results of the banks failing i say let them all fail, i dont worry about a 401k when im too worried about what to eat today!!!!

Fatter then a pig is an understatement. Where I live gas is in ample supply yet the price swings are as much as 15 to 20 cents a gallon. I for one cannot wait till the day when we are not so dependent on oil. I believe in a free market but when it comes to something that you NEED and not just want, there has to be some price controls. I have no public transportation where I live so a car is a necessity to go to work. To all of the speculators, oil companies and greedy *** lining your pockets at the expense of my economic misery, I hope the oil market drops to rock bottom and stays there and then the mother of all battery technologies comes along and then puts all of you out of business. I am sick and tired of juggling my finances just to make sure I can keep my car running so I can get to work. Enough said............

[hologram5]

And the drop in prices is a bad thing? I think that everything will drop in the long run. Let the bankers fall, I live day to day, hand to mouth, I don''t care and want them to fail...

[pensacola98]

Oil typically does drop this time of the year all over the commodity markets. The oil consumption on the northern hemisphere is far greater than the southern hemisphere, and sesonal changes do affect consumption rates.

Gasoline is generally $1 per gallon for every $33 of oil pricing on the commodity market.

Breathing oil markets are good for oil companies to take advantage of the "downtime" for maintenance and capital projects that upgrade infrastructure and require them to go offline.

One of the most difficult controls on oil regulation up to the 1980''s was forseeing market shifts as new industrialized nations entered the picture and affected consumption of suppies at unpredictable rates. Trade and tarrifs also affected purchasing power of foreign consumers as governments of debtor nations devalued their currency to offset imports.

[easeup-2009]

Well there''''s a shocker...oil prices dropping just before an election...The only problem is the OPECkers may have waited just a little too long and gouged just a little too much to change their candidates outcome this time....

Posted by onemoretim at 07:12 AM : Oct 06, 2008

That evil Bush & oil price dial!!!LOL!! I love it how some people think Bush controls everything.

[Keypinitreel1]

A bind man could see oil prices would drop before the election.

[easeup-2009]

A bind man could see oil prices would drop before the election.

Posted by keypinitreel at 09:12 AM : Oct 06, 2008

Substitute "stupid" for blind......BTW if this hysterical conspiracy were true, why did oil prices shoot up right before the 2004 election?

[shovethis1]

So if oil is so cheap, where is my $2.00 per gallon gas? Last time oil was this cheap it was when the DEMOCRATS were in the White House with a Balanced Budget! I guess maybe the Bush''s New Great Depression has some positives!

[jcb63]

Oil prices are lower now. It''s time to drop the price of gas below $2.00 a gallon. End of discussion.

[lucy-in-tx]

Gee.. doesn''t anyone else think that the Wall Street oil speculators had lots to do with this? After all, they pretty much drove the price of crude up.
Hmm.. good question, eh.

[ronsonit]

The Southeast still has gas in the $4 range w/crude prices low and it''s fresh fuel since the refineries were turned back on. Drill? They already ration the stuff they hold leases on and choke off Refinery Capacity to artificially increase the price at the pump. I say revoke the lifetime leases that they aren''t pumping at capacity and reauction them in ten year block''s to encourage the companies to pump what they got. The incentive here now, is to sell the least amount of product for the highest price per unit. A competetive marketplace bring''s prices down, the 5 companies pumping American Oil are a monopoly within our borders and should be broke up as AT&T was. They''ve killed their collective competition and are now able to no longer tie profit to the cost of raw materials.

[nothappyatall]

With oil down to $90 how come we are still paying $3.50 a gal for gas!!!!!!!!!

[easeup-2009]

A competetive marketplace bring''''s prices down, the 5 companies pumping American Oil are a monopoly within our borders and should be broke up as AT&T was. They''''ve killed their collective competition and are now able to no longer tie profit to the cost of raw materials.

Posted by Ronsonit at 09:46 AM : Oct 06, 2008

Excellent point. The fewer players there are, the easier it is to control pricing--in any market.

[heathme2003]

I''m with you, newster1. We''re still paying $3.89 in my state of NC!

[easeup-2009]

I''''m with you, newster1. We''''re still paying $3.89 in my state of NC!

Posted by heathme2003 at 10:50 AM : Oct 06, 2008

I was shocked to see $3.17 here in Ohio.

[noloyalisti]

I guess the fascists who run our right wing government got what they wanted. So the GOP cabal is letting the price fall.

[antoniof123]

So if gas has come down why is it over 3.50 a barrel. Sure went up fast but come down real slow and it will not come down to were it was before it went up.

They call that downward sticky.

[easeup-2009]

GEE...Just BEFORE the ELECTION ....Gas Prices Go DOWN...HMMM.

Posted by apple2pie at 12:25 PM : Oct 06, 2008

Another foil-hatter!!!

[navyjimfl]

the price of oil is down again.....yet the price at the pump is still $3.85 in Florida.....what''s up wiht that?

[nordeck52]

The way this article''s title is worded, it almost makes it seem like they think oil being below $90 is a bad thing. It''s only bad if you''re in the oil business, but then they don''t need any more $$ anyway, considering how much they''ve stolen from everybody the last few years.

[xmanborg]

Gas in Kansas City yesterday was $2.89 a gallon. Yes I said $2.89

[kennergirl]

The price of a barrel has dropped 40% since July.


I wonder if gas prices at the pump are actually going to come down. I doubt it. Gas prices are kinda like taxes. Once they''re raised, that''s it, we''ll never see "cheap gas" again.

[libluv2cnsor]

does this mean everybody goes back to driving 9mpg suvs??????

we deserve what we get!!

[toolmangler-2009]

I hope it drops to $5 a barrel, let them get a taste of what they have greedily handed out to us.

[toolmangler-2009]

GEE...Just BEFORE the ELECTION ....Gas Prices Go DOWN...HMMM.

Posted by apple2pie at 12:25 PM : Oct 06, 2008


Just like magic, isn''t it. Happens every four years, right on schedule. I call it "Ol'' Faithful". When the shrub took office the first time, gas was $.96 cents a gallon nation wide avg.

[toolmangler-2009]

does this mean everybody goes back to driving 9mpg suvs??????
we deserve what we get!!

Posted by libluv2cnsor at 03:06 PM : Oct 06, 2008


I ride my motorcycle year ''round'' (40 - 60 mpg). If I have to carry stuff I do it with my 4 cyl Mazda pickup. (28 mpg)

[fiberglass3]

Hey if it gets below $3.00 a gallon, we may take a vacation next summer,

[easeup-2009]

Just like magic, isn''''t it. Happens every four years, right on schedule. I call it "Ol'''' Faithful". When the shrub took office the first time, gas was $.96 cents a gallon nation wide avg.

Posted by ToolMangler at 03:14 PM : Oct 06, 200

Not to let facts ruin your rant, but gas spiked before the 2004 election.

But please, keep ranting about how Bush controls everything--it''s very entertaining!

[gwjackie]

trickel

[andejack]

Why is it so difficult for us to say WHOOOPEEE! Semms like we are fixated on the POOR ME, must be George''s fault, what can you do for me next, the world is doomed, etc., etc. ect., adnauseum. For years thinking/logical people have known that the everything must go up, I "want it all, right now", on and on, lifestyle/philosophy was not infinitely sustainable. Now we are faced with that reality and all we hear is "What the H--- happened?" who''s at fault," "where can we pin the blame!" What a warpped world we live in. Just maybe, a significant depression would be GOOD MEDICINE for the ills we are all responsible for.

[pepperwood2]

It''s really terrific that oil is below 90 dollar a barrel. Just when are we going to start seeing some real relief at the pumps and real savings on our heating oil, kerosene, & diesel here in the Mid Atlantic & New England States.

Gasoline is still 3.69/gal & heating oil 3.59/ gallon. Kerosene 4.85/gal. To get a better idea these prices should all be a dollar less at 90/barrel.

These Big Oil & Financial CEO''s have been sleeping with Barney Franks & other Liberals Cronies to prevent a return to normal. Just who do these bandits think there fooling around with.

[jettskiman]

Its 3.38 for reg here in Oregon. It should be about 2 bucks with the price down under 90 bucks a barrel. It seems it was only 3.80 when it was 120 a barrel.

[claydowner]

Before anyone gets into gas guzzling mode please remember we have suffered over 40,000 casualties in Iraq. We are spending over $10 billion every month. All of this blood and treasure has been wasted because of our dependence on imported oil. The wild fluctuations of the oil market going up then down simply underscore our complete dependence on foreign oil. This dependence on foreign oil imports will help destroy our superpower status and our economy. We can not afford to keep hemorrhaging $700 billion overseas each year to petrol dictators many whom support terrorism.

We need to stay focused on Al Gore''s and T. Boone Pickens''s energy plans. Think about clean electricity from windfarms on the Plains from Texas to Canada. Think about clean electricity from solar thermal plants and photovoltaics in the South and desert Southwestern US. Think about smart electrical grids connecting to the consumer on the two coasts. Natural gas for trucks and cellulosic ethanol for flex fuel cars needs to be the law of the land. Electric plug-in cars also need to be built. Oil is just going to spike up again and gas will be $7 to $8 per gallon next time. Americans need to get smarter about conserving energy, driving fuel efficient cars that get 50 MPG, and supporting candidates like Obama-Biden who care about ridding us from foreign oil by developing wind, solar, and geothermal sources of energy.

[drinuk]

The reason for the downturn in Oil prices is quite simple, the Crooks on Wall St are heading for the hills along with the food brokers and bank ceo''s. They are running scared of the people, they figure we maybe looking for a suitable tree.

Anyone seen CHENEY ???

[drinuk]

Did someone mention Gore ??? Right now we need him like a hole in the head, just as we need his get rich quick global warming scam and carbon credits. The World is going to H E L L in a hand cart and these cretins tell us the ice is melting. Gore is included in the 1% shafting the ordinary people of this nation, Be Gone Crook !

[sjc_1]

I started wondering if it is better to have $140 oil and no crash or a crash and $90. I came to the conclusion that if those were our only two choices, I would pick no crash.

[swingset4u]

The price of crude is not driven by the speculation of financial markets. DEMAND is key. Only use what you need to use to get back and forth to work. Send a clear message to big oil that enough is enough! Don''t put your money in the tank put it in the bank!