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.

[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!

[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.

[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 !

[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 ???

[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.

[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.

[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.

[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.

[gwjackie]

trickel

[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!

[fiberglass3]

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

[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)

[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]

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

[libluv2cnsor]

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

we deserve what we get!!

[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.

[xmanborg]

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

[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.

[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?

[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!!!