Oil resumed its fall towards $60 this morning and looks set to end the week down about 8 per cent, its largest weekly fall since late January, on deepening economic pessimism and fears of new rules to curb futures speculation.
Oil price dips below $60 a barrel
Oil prices sank below $60 a barrel today, poised for their biggest weekly fall since January, as traders focused on economic uncertainty.
The latest report from the International Energy Agency predicted an increase in oil consumption in 2010, but expected it to stay negative in 2009 and saw limited demand for OPEC crude.
US light crude for August delivery was down 82 cents at $59.59 by 11.08am.
London Brent crude was down 78 cents at $60.32 a barrel. Oil rose to more than $73 at the end of June, its highest level this year, but since then the market has dropped more than $10 as expectations of a swift economic recovery faded.
Although the IEA predicted world oil use would grow in 2010, it added that depended on expected economy recovery materialising.
Prices briefly edged higher immediately after the agency's report, but then resumed their slide.
“It is not a report that is going to add to the downside. It is slightly positive and won't add to the weak trend of recent days," said Olivier Jakob of Petromatrix.
Oil has fallen in six of the previous seven sessions. So far this week, prices have fallen nearly 10 per cent, slightly less than an 11 per cent weekly drop in January.
The latest wave of selling began after much worse than expected US unemployment data yesterday and has been sustained by a steady stream of negative economic news.
An announcement this week from US regulator the CFTC that it was considering tighter controls on excessive speculation in the commodity markets added to the bearish mood, although analysts said it would take months to implement changes.
“A strong incentive was created for market participants of all types to draw back from the market, particularly from the long side of US markets,” Barclays Capital said in its weekly oil review.
One supportive factor for the oil market has been disruption of supplies by Nigerian militants. That has helped tighten OPEC supplies, although the group's discipline has declined to roughly 70 per cent from an estimated peak of 80 per cent of promised supply curbs earlier this year.
Reuters