Crude futures dipped below 70 U.S. dollars a barrel on demand concerns Thursday after the U.S. government reported a unexpected rise in crude stockpile.
Light, sweet crude for November delivery plunged 4.69 dollars to settle at 69.85 dollars a barrel on the New York Mercantile Exchange after hitting 68.57 dollars, a level not seen since June 27, 2007.
Crude prices have declined more than half its July record high of 147.27 dollars a barrel due to investors' increasing concerns that a global economic recession could curd energy consumption.
Demand concerns
"The price of a barrel of oil continued to decline today as fears of declining demand among market participants persist," Wall Street Strategies' senior research analyst Conley Turner told Xinhua.
The weakening global economy and turmoil in the credit markets have clouded the outlook for world oil consumption.
The Philadelphia Federal Reserve said regional manufacturing conditions weakened in October. The bank's regional index came in at a negative 37.5 compared with a positive 3.8 for September.
On Monday, Goldman Sachs cut its year-end forecast of oil to 70dollars a barrel from 115 dollars and lowered its price outlook for the end of 2009 to 107 dollars from 125 dollars per barrel amid global financial crisis.
"The fact of the matter is that demand destruction is taking place in the United States as for the rest of the G7, for that matter as these economies teeter on the brink of recession," said Turner.
"While there may be some ebbing in the demand pressures out of India and China, it not going to be as much as what is occurring in the Unite States," he added.
OPEC to cut production
In its weekly report, the Energy Information Administration said crude stocks rose by 5.6 million barrels last week, well above the 3.1 million barrel increase expected by analysts. Gasoline stock rose by 7 million barrels last week, more than double the build analysts had expected.
The Organization of the Petroleum Exporting Countries (OPEC), which produces more than 40 percent oil in the world, said on Thursday it had brought forward an emergency meeting to discuss the impact of global recession on oil markets to Friday next week.
"The expectation that OPEC will cut back production in an effort to stabilize the price of the commodity has not been sufficient to mitigate the negative sentiment," said the analyst.
"There is less risk to the downside for oil while more upside chance at this point. Markets tend to overshoot at both ends of the spectrum and it is no different in this case," Turner pointed out.
(Xinhua News Agency October 17, 2008)
