Oil falls below 40 $ in London
Brent crude oil dropped to 39.74 dollars a barrel in London trading Friday, at the lowest level since January 2005. The decline in oil prices due to decrease demand because of the global economic crisis and stagnation in industrialized consumer nations for oil.
As oil prices have tumbled to below 41 $ a barrel after U.S. government report said that the U.S. labor market lost 533 thousand jobs last month, while the unemployment rate rose to 6.7%, the highest since 1993.
The price of benchmark U.S. light oil to 40.81 dollars per barrel, the lowest settlement price since December 2004 and the price fell earlier in the session Friday to 40.50 dollars per barrel.
Traders expect the market to test the threshold of forty dollars a barrel, while indications are that the world economy is moving towards a period of deep and long recession, which would therefore demand for energy.
In contact with the island said Abdullah bin Hamad al-Attiyah, Deputy Prime Minister and Minister of Energy and Industry, the country that the main reasons for this decline in production over the recent accumulation of large stockpiles of oil in the major industrialized countries.
OPEC seeks to reduce production to stem price declines. Edward Meyer said energy analyst at Global Corporation, F there OPEC surplus production up to between four million and five million barrels per day, and it needs to cut up to between 2.5 and three million more barrels at its next meeting in November 17 In Algiers to make the desired impact on prices.
The U.S. investment bank Merrill Lynch in a research note Thursday that it was likely to continue to decline in oil prices for quite some time next year, it could hit 25 dollars a barrel before rebounding.
The bank said oil prices were expected to begin to recover in the second half of 2009, and noted that the temporary decline under 25 dollars a barrel is possible if the recession has spread to China. What is now needed to considerably reduce the production from outside OPEC.
The bank said “in our view, oil prices could drop sharply in the first quarter of 2009 or early in the second quarter of 2009 with the seasonal decline of demand, and we expect that after the start of the recovery of economic activity to see oil prices rebound slightly in the second half of 2009.”
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