Oil at 1 yr low on fears of demand slump

Reuters | Friday, 10 October 2008

Oil tumbled by more than US$4 a barrel on Friday, extending losses to fresh one-year lows, as traders feared the credit crisis would send the global economy into recession and hurt fuel demand.

By 0227 GMT, US light, sweet crude for November delivery fell $4.26 to $82.33 a barrel, having earlier fallen to $82.10 a barrel.

"The decline in oil prices was despite Opec indicating that it will hold an extraordinary meeting on 18 November," said David Moore, a commodity strategist at Commonwealth Bank of Australia.

Opec said it will hold the emergency meeting in Vienna to discuss the impact of the financial crisis on the oil market.

The statement came after calls from Opec ministers this week for action to halt a slide in oil prices.

Investors will also look to Washington, where finance ministers and central bankers from the Group of Seven major industrial nations will meet amid expectations that the group will present a united front on policy to contain the crisis.

The International Energy Agency (IEA) releases its monthly report on the oil market at 0900 GMT, and investors are expecting another cut in demand expectations for this year and next.

The slumping economy has already prompted analysts to revise downwards their global oil demand growth target, with the US Energy Information Administration this week dropping its 2009 projection by 140,000 barrels per day.