Oil dips below $56
November 14th, 2008 - Posted in Energy PricesCrude falls as investors focus on a weak demand outlook. OPEC official says the cartel will hold another emergency meeting.
By Ben Rooney, CNNMoney.com staff writer
November 14, 2008: 9:43 AM ET
NEW YORK (CNNMoney.com) — The price of oil fell Friday as investors remain worried about weak energy demand despite news that OPEC plans to hold another emergency meeting.
Light, sweet crude for December deliver traded down $1.41 at $56.82 a barrel on the New York Mercantile Exchange. The contract rose $2.08 cents to settle at $58.24 a barrel Thursday after U.S. stocks snapped a 3-day losing streak.
The market is digesting news that OPEC officials will hold an emergency session Nov. 29 to discuss the rapid decline of the price of crude.
Members of the Organization of the Petroleum Exporting Countries cut oil output by 1.5 million barrels a day Oct. 24 in an attempt to prevent the price of oil from falling further.
Another OPEC production cut could have a “short-term impact” on the price of oil, said Tom Pawlicki, oil industry analyst at MF Global in Chicago. “At the same time, the economic news is so dire that it may not create a lasting bottom in the price of oil.”
Concerns that a looming global recession will continue to undermine demand for gasoline and other petroleum products has driven the price of oil down 60% since July’s all-time high above $147 a barrel.
Demand concerns were highlighted Friday by grim figures from the European Union indicating that the euro zone economy has officially entered a recession.
Major indexes in Europe were higher despite the recession diagnosis. London’s FTSE index led gainers, rising nearly 3% in afternoon trade. The DAX in Frankfurt was up 2.8% and the CAC-40 in Paris advanced 1.6%.
Markets in Asia rallied overnight. The Nikkei in Japan added 2.7% and Hong Kong’s Hang Seng index rose 2.4%.
On Thursday, the Dow surged 552 points, the largest single-day point gain for the blue-chip average, as stocks bounced off a 5-year low.
But the rally’s momentum did not carry over into Friday’s session.
Stocks in New York tumbled in the first few minutes of trade. The Dow Jones industrial average was down 1.5%.
“The rally yesterday was not a fundamental change,” Pawlicki said. He added that the oil market will continue to focus on stock prices Friday.
Oil traders have taken cues from global stock markets to gauge the severity and duration of the economic downturn and its impact on energy demand. As a result, oil prices tend to rise and fall in tandem with world stock indexes. To top of page
