Fred Harteis News Articles - Oil prices fell below $60 a barrel on Tuesday to their lowest level in 20 months, as weak economic growth has reduced consumption around the world.
The drop came despite growing indications that OPEC producers have been trimming output to try and stem the price decline. The cartel reached an emergency agreement last month to reduce output by 1.5 million barrels a day starting on Nov. 1.
While no official tally of OPEC production exists, several member countries — including Algeria, Qatar, the United Arab Emirates and Kuwait — have signaled that they had reduced their output by about 1.1 million barrels a day. Various reports also suggested that Saudi Arabia, the cartel’s kingpin, had warned some Asian customers that it would be paring exports by 5 percent next month.
However, according to estimates by PFC Energy, a consulting firm, producers have actually trimmed their output by only about 800,000 barrels a day.
Prices, meanwhile, continue to fall. Crude oil futures declined as much as 5 percent, falling $3.08 and settling at $59.33 on Tuesday, a level last seen in March 2007. Prices have plummeted since hitting a peak settle price of $145.29 a barrel in July.
Oil producers are facing the difficult task of trying to balance oil markets during one of the worst economic slowdowns in recent memory. The International Monetary Fund recently warned that the world faced the prospect of a simultaneous recession in the United States, Europe and Japan for the first time in more than 60 years.
The Chinese economy, long the main engine of growth in oil demand, was also showing signs of slowing. As a result, a growing number of oil specialists now expect global demand to drop this year, the first annual decline since 1983.
Oil consumption in the United States collapsed over the summer as prices reached record levels and gasoline prices above $4 a gallon.
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Source; Nytimes.com
About Fred Harteis: Fred Harteis leads Harteis International. Fred Harteis has a background in agriculture and has created many successful business ventures.
