Oil Prices BELOW $60 a barrell, FINALLY!!
LONDON (Reuters) - Oil slid below $60 Friday, after a heavy hit the previous day when U.S. oil and natural gas stocks swelled and added proof that record prices were leading the world's top consumer to burn less fuel.
Light sweet crude for December delivery was off 52 cents at $59.50 a barrel midday Friday, the lowest level in nearly three months.
Heating oil fell 2.49 cents to $1.8450 a gallon. Gasoline fell 1.81 cents to $1.5950 a gallon.
Although prices have fallen close to $5 a barrel this week, they are still 24 percent stronger than at the start of the year and remain at historically high levels that threaten growth.
Germany and Japan sounded the alarm.
"A lasting increase in oil prices to clearly above $60 per barrel would markedly dampen growth not only in Germany but worldwide," said Germany's outgoing Economy Minister Wolfgang Clement on Friday.
Bank of Japan Deputy Governor Toshiro Muto said that high oil prices posed a "major risk" to the global economy.
Concrete evidence was emerging that oil at or near $70 a barrel had taken a toll on energy consumption, according to Daniel Yergin, a leading energy expert.
"I suspect demand is on a different track now...I think globally," the chairman of Cambridge Energy Research Associates told Reuters.
But some traders and analysts have questioned the accuracy of demand figures and say prices could quickly bounce higher.
They have also said that although supplies of fuels, such as heating oil, are higher than a year ago, that could change as winter approaches in the Northern Hemisphere.
"By first snow we expect extremely low stocks of heating oil and natural gas, with major pressure on refineries that need to (have maintenance)," said Deutsche Bank. "The fact is, some demand destruction is needed to balance this market."
Dealers appeared to disregard a disruption in Nigerian supplies. A strike by unions has suspended some 240,000 barrels per day (bpd) of Brass River crude.
Falling demand?
Government data showed a decline in total oil product demand deepening to 3.2 percent over the past four weeks, a bigger drop than last week's 2.8 percent, although gasoline and distillate deliveries maintained similar year-on-year weakness.
A rise in U.S. crude stocks took supplies nearly 12 percent above a year earlier, after Hurricanes Rita and Katrina closed Gulf Coast refineries and slashed demand for the feedstock.
Hurricane Wilma, which had spooked traders when it threatened to give Gulf of Mexico oil facilities their third beating this year, was expected to track instead toward Florida.
The government said 64.5 percent of the region's 1.5 million bpd of crude output capacity remains shut, while five U.S. refineries -- or 7.7 percent of the nation's fuel processing capacity -- are completely shut.
"The downtrend that started immediately after hurricane Katrina remains firmly in place in spite of Wilma and industrial problems at Total in France," said Christopher Bellew of Bache Financial in London.
France's biggest refinery, Total's Gonfreville, has been shut for a month because of a strike. Workers will vote on Friday on whether to extend the stoppage.
Adding to bearish sentiment, the International Energy Agency agreed Thursday to allow any unplaced oil from its initial emergency reserves release to remain available to the market.
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