Oil prices continue to fall.
The AP (10/23) reports, "Oil prices tumbled below $67 a barrel to 16-month lows Wednesday after the government reported big increases in U.S. fuel supplies -- more evidence that the economic downturn is drying up energy demand." According to the Energy Information Administration (EIA), "crude inventories jumped by 3.2 million barrels last week, above the 2.9 million barrel increase expected by analysts." Similarly, "gasoline inventories rose by 2.7 million barrels last week, and inventories of distillates, which include heating oil and diesel, rose by 2.2 million barrels." Jim Ritterbusch of Ritterbusch and Associates said, "As we begin to see evidence that demand is leveling...then we can start discussing a possible price bottom. But it appears premature at this point."
Another AP (10/23, Jahn) article reports, "With the global economy edging toward recession, the specter of diminishing supply has been blown away by a stunning lack of demand that now has the market in a stranglehold." Chakib Khelil, "Algeria's oil minister and OPEC's current president, speaks of a 'significant' reduction from the present daily output of around 29 million barrels, and expectations are that the group could pare up to 2 million barrels from that figure." While "cuts of that magnitude have in the past led to significant crude price hike," analysts say "there are signs that a significant upward trend may be short-lived with fear growing that the worst is yet to come for the global economy." Analyst Stephen Schork said that OPEC was "in a bit of panic," having "underestimated what happens when the bubble implodes." The Financial Times (10/23, Flood) also covers the story.
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