Oil falls below $94 on falling global demand
By STEVENSON JACOBS, AP Business Writer
Oil prices closed at their lowest level in two weeks Thursday, tumbling below $94 a barrel on doubts that a revamped financial bailout plan will be enough to avoid a protracted economic slump and revive dwindling U.S. energy demand.
The declines came a day after the Senate overwhelmingly approved the rescue package. The bill now goes to the House of Representatives for an expected vote Friday; House lawmakers stunned investors Monday by rejecting the bailout plan, although Senators added $100 billion in tax breaks and other sweeteners in a bid to win over enough dissenting House votes.
Even if the plan wins approval, oil market traders are skeptical that it will steady the teetering U.S. economy and reverse flagging demand for energy in the world's largest consumer. The plan would remove billions of dollars in bad mortgages and other toxic debt from the books of banks and other financial firms, though critics argue it doesn't go far enough to help ordinary Americans struggling with soaring costs for food and fuel and falling home prices.
"I think the oil market believes that no size of a rescue plan is going to be enough to stave off a recession," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn.
He said government data released Thursday showing a slowdown in U.S. manufacturing and growing unemployment suggest that a drop in U.S. energy demand "is going to accelerate as we head into a steeper recession."
Light, sweet crude for November delivery fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement since Sept. 16. Prices earlier jumped as high as $100.37 but eased back later as traders digested the details of the revised bailout package.
The November crude contract fell $2.11 to settle at $98.53 on Wednesday.
Oil prices have fallen about $15, or 13 percent, in the past month as investor concerns about waning global energy consumption outweigh threats to supplies caused by Gulf Coast hurricanes and militant attacks in Nigeria.
The slump in energy demand has accelerated beyond the U.S. In India, domestic oil product sales totaled 2.41 million barrels per day in August, the lowest level this year, according to Barclays Capital research. In the same month, Japan's oil demand fell by 8.4 percent.
Significant gains over the past days by the dollar against the euro have also helped push down prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but return to the U.S. currency as it strengthens.
The 15-nation euro bought $1.3833 in trading Thursday, down from $1.4061 in the previous session.
Meanwhile, statistics from the U.S. Labor Department released Thursday showed more signs of a weakening economy, adding to concerns about falling oil demand.
The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, significantly above analysts' estimate of 475,000. The total is the highest since just after the Sept. 11 terrorist attacks seven years ago.
Also Thursday, the Commerce Department said factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.
Recent data shows that U.S. fuel demand is falling while supplies rise.
The Energy Department's Energy Information Administration said Wednesday in its weekly report that crude stocks rose by 4.3 million barrels, or 1.5 percent, to 294.5 million barrels for the week ending Sept. 26. Analysts had expected stocks to rise or fall of 1.5 million barrels, according to a survey by energy research firm Pla
By STEVENSON JACOBS, AP Business Writer
Oil prices closed at their lowest level in two weeks Thursday, tumbling below $94 a barrel on doubts that a revamped financial bailout plan will be enough to avoid a protracted economic slump and revive dwindling U.S. energy demand.
The declines came a day after the Senate overwhelmingly approved the rescue package. The bill now goes to the House of Representatives for an expected vote Friday; House lawmakers stunned investors Monday by rejecting the bailout plan, although Senators added $100 billion in tax breaks and other sweeteners in a bid to win over enough dissenting House votes.
Even if the plan wins approval, oil market traders are skeptical that it will steady the teetering U.S. economy and reverse flagging demand for energy in the world's largest consumer. The plan would remove billions of dollars in bad mortgages and other toxic debt from the books of banks and other financial firms, though critics argue it doesn't go far enough to help ordinary Americans struggling with soaring costs for food and fuel and falling home prices.
"I think the oil market believes that no size of a rescue plan is going to be enough to stave off a recession," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn.
He said government data released Thursday showing a slowdown in U.S. manufacturing and growing unemployment suggest that a drop in U.S. energy demand "is going to accelerate as we head into a steeper recession."
Light, sweet crude for November delivery fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement since Sept. 16. Prices earlier jumped as high as $100.37 but eased back later as traders digested the details of the revised bailout package.
The November crude contract fell $2.11 to settle at $98.53 on Wednesday.
Oil prices have fallen about $15, or 13 percent, in the past month as investor concerns about waning global energy consumption outweigh threats to supplies caused by Gulf Coast hurricanes and militant attacks in Nigeria.
The slump in energy demand has accelerated beyond the U.S. In India, domestic oil product sales totaled 2.41 million barrels per day in August, the lowest level this year, according to Barclays Capital research. In the same month, Japan's oil demand fell by 8.4 percent.
Significant gains over the past days by the dollar against the euro have also helped push down prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but return to the U.S. currency as it strengthens.
The 15-nation euro bought $1.3833 in trading Thursday, down from $1.4061 in the previous session.
Meanwhile, statistics from the U.S. Labor Department released Thursday showed more signs of a weakening economy, adding to concerns about falling oil demand.
The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, significantly above analysts' estimate of 475,000. The total is the highest since just after the Sept. 11 terrorist attacks seven years ago.
Also Thursday, the Commerce Department said factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.
Recent data shows that U.S. fuel demand is falling while supplies rise.
The Energy Department's Energy Information Administration said Wednesday in its weekly report that crude stocks rose by 4.3 million barrels, or 1.5 percent, to 294.5 million barrels for the week ending Sept. 26. Analysts had expected stocks to rise or fall of 1.5 million barrels, according to a survey by energy research firm Pla
