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Crude Falls on Forecasts Global Recession Will Cut Fuel Demand
By Grant Smith and Alexander Kwiatkowski
Jan. 19 (Bloomberg) --
Crude oil futures fell below $35 a barrel in New York on forecasts faltering global economic growth will drive down fuel consumption for a second year.
Goldman Sachs Group Inc., while forecasting a recovery in prices later this year, said demand will decline by 1.6 million barrels a day. That’s more than three times the drop forecast by the International Energy Agency last week. OPEC may have to cut output again should prices fall further, Algerian Oil Minister Chakib Khelil said over the weekend.
“Demand is falling faster than oil producers are cutting production,” said Thina Saltvedt, an oil analyst at Nordea Bank AB in Oslo. “As long as OPEC are one step behind, prices will continue to fall.”
Crude oil for February delivery fell as low as $34.37 a barrel in electronic trading on the New York Mercantile Exchange, and was $2.06 down at $34.45 at 9:51 a.m. local time. There will be no floor trading in New York today because of the Martin Luther King Day holiday.
The Nymex February contract will expire at the end of trading tomorrow. The more-actively traded March contract dropped $1.65to $40.92 at 9:51 a.m. local time.
Rising U.S. stockpiles and forecasts from the IEA and OPEC for declining world demand contributed to an 11 percent decline in Nymex crude prices last week. Prices are down 20 percent so far this year, after tumbling 54 percent in 2008.
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