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Asian Stocks, U.S. Futures Advance as Governments Back Banks

By Kyung Bok Cho and Shani Raja

Oct. 13 (Bloomberg) -- Asian stocks rose, rebounding from the worst week since at least 1987, after Australia guaranteed bank deposits and European leaders agreed to support lenders in a global effort to end the credit crisis. U.S. index futures gained.

National Australia Bank Ltd., the country's largest, surged 8.9 percent and Woori Finance Holdings Co. jumped 5.4 percent after Australian funding costs and Asia-Pacific bond risk eased. Leaders of the 15 countries using the euro pledged over the weekend to guarantee bank borrowing. Cheung Kong Holdings Ltd. paced gains in Hong Kong after the government said the city may use its foreign reserves to stabilize financial markets. BHP Billiton Ltd. climbed 5.9 percent after crude oil surged.

The MSCI Asia Pacific excluding Japan Index added 1.6 percent to 258 at 10:37 a.m. in Hong Kong. The index tumbled 20 percent last week. Financial stocks accounted for more than half of today's gain. Japan is shut for a holiday. Standard & Poor's 500 Index futures advanced 4 percent.

``The measures are improving sentiment,'' said Hugh Dive, Who helps manage about $3 billion at Sydney-based Investors Mutual Ltd. ``It may prevent a depression, but a lot of companies are facing tough times, so you're unlikely to see them reporting stronger outlooks and earnings. The economy is still slowing.''

Treasury futures fell for the fourth time in five days, while the euro rose the most in three weeks against the dollar and the yen.

Australia's S&P/ASX 200 gained 3.7 percent, led by National Australia Bank. South Korea's Kospi added 1.1 percent. Hong Kong's Hang Seng Index advanced 0.6 percent.

Market Rout

World leaders are working to support financial systems to unlock credit markets and stop the rout in global stock markets. About $25 trillion in value has been erased in value this year on concern that frozen credit markets will trigger a global recession. The world's financial firms have reported almost $600 billion in losses and writedowns from U.S. mortgage-related investments since the beginning of last year.

In the U.S., Dallas Federal Reserve President Richard W. Fisher said the Fed will ``consider every option'' to restore confidence.

U.S. stocks fell on Oct. 10 in volatile trading, with the Dow Jones Industrial Average swinging the most in its history. The S&P 500 lost 18 percent last week, its worst drop since 1933.

National Australia Bank, the country's largest lender, added 8.9 percent to A$22.66 after Prime Minister Kevin Rudd said the government will guarantee all bank deposits for the next three years.

Money Injection

Funding costs fell. The premium charged to exchange floating- for fixed-rate interest payments in Australia for a period of one year shrank to 75 basis points, or 0.75 percentage point, as of 11:56 a.m. in Sydney, from 157 on Oct. 10, the biggest decline since 2000.

A gauge of funding availability also eased as the central bank added A$2.85 billion ($1.9 billion) to the financial system.

Woori Finance climbed 5.4 percent to 10,850 won after the cost of protecting corporate and government bonds in Asia and the Pacific from default dropped.

The Asia index of 50 investment-grade borrowers outside Japan plunged 55 basis points to 295. Declines indicate perceptions of creditworthiness are improving.

Cheung Kong, Hong Kong's second-largest developer, rose 3 percent to HK$69.55.

Hong Kong may use all of its foreign reserves to support its financial markets, Julia Leung, under secretary for financial services, said in an interview with Hong Kong Commercial Broadcasting. China will boost domestic demand to sustain the nation's ``fast and stable'' economic growth, central bank Deputy Governor Yi Gang said.

BHP Billiton, Australia's biggest oil producer, advanced 5.8 percent to A$29.35. SK Energy Co., South Korea's largest oil refiner, rose 4.8 percent to 70,200 won.

Crude oil rose 3.7 percent to $80.60 a barrel today in after-hours trading, on speculation the actions to support the financial system will ease the credit turmoil that threatened global growth and demand for resources. The contract plunged 10 percent to $77.70 on Oct. 10 in New York.

Gas Prices Down 35 Cents Over Two Weeks
Falling Oil Prices A Key Factor


The tumbling price of crude oil has turned into a price break at the pump.

The Lundberg Survey released this weekend shows the average price of a gallon of self-serve regular has gone down by 35 cents over the past two weeks.

It's now $3.31. Mid-grade was $3.45 as of Friday and premium was $3.57.


The cheapest gas is in Wichita, Kan., at $2.79 for a gallon of regular. Honolulu is the most expensive at $3.91.

The Lundberg Survey averages prices from 5,000 gas stations around the country.

The price of crude last week dropped below $78 a barrel, reflecting investor pessimism.

On Monday, oil prices were rebounding from a 13-month low, rising above $80 a barrel in Asia.

It's happening on expectations that a pledge by European countries to keep banks from collapsing will stabilize the global financial system.

By midday in Singapore, light, sweet crude oil for November delivery was up $2.76 to $80.46 a barrel in electronic trading on the New York Mercantile Exchange. Friday, the contract fell $8.89 to $77.70. That was the lowest price since Sept. 10, 2007.

Energy analyst Victor Shum credits the turnaround mainly to the European bank rescue plan.

At a summit in Paris on Sunday, leaders of the 15 euro-zone nations agreed to guarantee new bank debt through next year. They also vowed to rescue important banks in danger of failing.

Oil rallies in Print October 14, 2008 03:03pm

OIL prices rallied further today after world leaders rolled out measures to tackle the global financial crisis.

Prices had slumped to one-year lows beneath $80USD ($112.96 AUD) per barrel on Friday during a global equities meltdown that sparked fears of recession that would crimp demand for energy.

New York's main contract, light sweet crude, rose $2.02 to $83.21, at the New York Mercantile Exchange, where it closed at $81.19.

Brent North Sea crude for November gained $1.51 after rising $3.37 to $77.46 on Monday, in London.

"There was a certain amount of panicking going on,'' said David Johnson, an oil analyst with Macquarie Securities in Hong Kong.

But traders may have felt prices fell too far in the short term, sparking this week's rise while the market reassesses which way to move, Mr Johnson added.

Sucden analyst Nimit Khamar said prices turned higher after world leaders rushed out plans over the weekend to help stabilise their banking systems.

Efforts have intensified this week, with Britain pumping 37 billion ($65 billion USD) into three struggling banks. Germany and France also unveiled massive rescue packages.

Oil prices have plunged from record highs above $147, reached in July, because of worries over demand in a slowing global economy, dealers said.

Mr Johnson said any recovery in oil prices will depend partly on moves by the Organisation of the Petroleum Exporting Countries (OPEC) cartel, which is to told an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.

Once the global banking crisis is surmounted, a recovery in oil will also depend on whether there is a slowdown in growth next year, and what impact that would have on demand for energy, Mr Johnson said

Gordon Brown calls on energy firms to pass on gas and oil price falls
Gordon Brown has called on energy firms to pass on falls in gas and oil costs to customers.

By Rosa Prince and Harry Wallop
Last Updated: 10:04AM BST 20 Oct 2008

As winter approaches, the Prime Minister said it was important that suppliers cut fuel bills to reflect the savings they had made as a result of declining wholesale prices.

Writing in The People newspaper, Mr Brown said: "As the nights get colder, British families will be turning up their central heating.

"I know the increase in gas and electricity prices will be on their minds - and it's on mine too. My first priority is looking after the most vulnerable people.

"Now that global oil and gas prices are falling, we will demand that energy companies pass on these cuts to their customers as price reductions as soon as possible."

Consumers have been hit with two sets of price increases so far this year, taking up the average dual fuel gas and electricity bill from 912 at the start of the year to 1,303. Energy companies have recently warned that they could climb yet further in the New Year if Britain's ancient power stations fail to cope with a difficult winter.

However, the price of gas on the wholesale market which is closely tied to oil has started to fall.

With the cost of oil half that of its $147 dollar-a-barrel high in July, wholesale gas has fallen by around 20 per cent from its record levels in the summer.

The energy companies argue that they have already bought the majority of the gas that they need for this winter and they will not be able to take advantage of lower prices until next year.

Last week, the Prime Minister said that falling oil prices should be reflected at the petrol pumps.

Mr Brown is said to have given the energy firms until the start of December to voluntarily pass on price cuts or face Government action.

The gas companies have also been ordered by Ofgem to make their tariffs fairer. They have until December to tell the industry regulator how they will ensure customers who do not pay by direct debit either because they are on a pre-payment meter or because they pay be cheque are not disadvantaged.

Crude Oil Rises a Second Day as OPEC Prepares to Cut Production

By Grant Smith

Oct. 20 (Bloomberg) -- Crude oil rose for a second day on speculation OPEC will cut production to halt a 50 percent slide in prices from July's record.

OPEC, supplier of about 40 percent of the world's oil, may pare output by 2 million barrels a day in stages to stabilize prices, said Chakib Khelil, the group's president. Deutsche Bank AG cut its 2009 crude oil price estimate by 35 percent to $60 a barrel, citing the possibility of a ``major world recession.''

``OPEC are going to step in and try to protect their price,'' Robert Laughlin, senior broker at MF Global Ltd. in London, said in a television interview. ``They have to do a million -- anything less and it might backfire against them.''

Crude oil for November delivery gained as much as $2.15, or 3 percent, to $74 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $73.19 at 9:30 a.m. in London.

Oil dropped to a 14-month low of $68.57 a barrel on Oct. 16. Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange.

Contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.

China's economy grew 9 percent in the third quarter, the slowest pace in five years, underscoring concern that the spreading financial crisis threatens the biggest contributor to global growth.

`Significant Cut'

The Organization of Petroleum Exporting Countries brought forward to Oct. 24 a Vienna meeting planned for November to discuss output levels.

While there is a consensus among the group's members to cut output, there's no agreement on the size of the reduction, and that could range between 1 million and 2 million barrels a day, Khelil, the group's president said in an interview on Algerian television yesterday.

``A one to 2 million barrel cutback is quite likely,'' Tom James, an independent commodity trading adviser, said in a Bloomberg Television interview. ``It's important we do hold around $60 to $70. If we see $50 or below for many, many months, this is going to hurt investment in the industry.''

OPEC's 13 members produced 32.2 million barrels a day in September, according to a survey of analysts and producers.

Brent crude oil for December settlement rose as much as $1.97, or 2.8 percent, to $71.57 a barrel on London's ICE Futures Europe exchange, and traded at $70.42 at 9:31 a.m. London time.

OPEC Risks Split Over Oil Cuts as Economies Reel, Prices Drop

By Grant Smith and Margot Habiby

Oct. 22 (Bloomberg) -- OPEC, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.

Iran's energy minister, Gholamhossein Nozari, said yesterday OPEC may slash output quotas by 2.5 million barrels a day, or 8.7 percent, an amount about equal to what's pumped from Kuwait. The Algerian minister and OPEC president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.

The debate in the Organization of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a U.S. ally, against Venezuela and Iran, two nations that oppose U.S. foreign policy and advocate higher oil costs. Crude plunged 52 percent to $70.89 yesterday from its July 11 record of $147.27 on the New York Mercantile Exchange.

``The divisions arise in OPEC because what countries need and want varies,'' said Gareth Lewis-Davies, an oil analyst at Dresdner Kleinwort Group Ltd. in London. ``The Saudis are playing a long-term political game. Other countries have higher costs.''

Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.

Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez's government is spending oil revenue on social programs, the figure is about $120, he said.

Below $50

Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in an Oct. 17 report. There is a 9 percent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 percent, Deutsche said.

The world's industrialized economies will expand next year at the slowest pace since 1982, the International Monetary Fund said Oct. 8. Growth will weaken to 0.5 percent in 2009, from 1.5 percent this year, sending U.S. unemployment to its highest level in 16 years, the agency said.

Oil demand may fall for the first time in 15 years this year as the worst financial crisis in decades tips economies into recession, according to the Centre for Global Energy Studies, a London-based consulting company.

Different Agendas

``OPEC members have completely different agendas,'' Merrill Lynch analysts led by Francisco Blanch said in an Oct. 20 report. ``History shows that it is difficult to maintain discipline in a falling price environment, and OPEC cohesion has already started to decline.''

Eleven years ago, OPEC members bickered about output quotas as oil slid 28 percent in 10 months amid the onset of the Asian financial crisis. At a meeting in Jakarta in November 1997, they raised quotas, ignoring the turmoil that slowed Asian economies and cut oil demand. Prices fell another 44 percent by December 1998 to below $11 a barrel.

``OPEC members are worried that they will be slow to react and oil prices will drop to $50 or $40 a barrel,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.

After the late 1990s price drop, Saudi Arabia, Venezuela and non-OPEC nation Mexico led efforts to cut production to boost prices.

``The death of OPEC typically comes up as a question or a theme at times when prices are falling dramatically,'' said Tim Evans, an energy analyst at Citi Futures Perspective in New York. ``It is exactly at those moments when the OPEC membership tends to recognize that they need to come up with a combined response to the market.''

`Consensus to Reduce'

Algeria's Khelil said ``there is a consensus to reduce production, but there is no agreement on how much to cut'' on Algerian television Oct. 19.

Saudi Arabia, where officials haven't made any comments before this week's meeting, is likely to resist a cut of more than 1 million barrels because it's conscious of the political response in the U.S. and other consuming countries, said John Sfakianakis, chief economist at Saudi British Bank in Riyadh.

``I don't think we will see a 2 million-barrel cut, given the reaction that this will have both by the market and by the politicians,'' Sfakianakis said in a phone interview.

Saudi King Abdullah said at a June 22 oil summit in Jeddah that the world's largest oil-exporting nation seeks ``reasonable'' prices to producers and consumers.

`Absolutely Scandalous'

U.K. Prime Minister Gordon Brown said last week that it was ``absolutely scandalous'' that OPEC is considering cuts as the global economy risks falling into a recession.

At OPEC's last meeting in September, the group's members agreed to adhere more strictly to production quotas, trimming output by about 500,000 barrels a day.

Saudi Arabia produced 9.45 million barrels a day in September, according to Bloomberg estimates. Its output target is set at 8.94 million barrels. Iran, OPEC's second-largest producer, trimmed production by 130,000 barrels to 3.95 million barrels day, close to its quota of 3.82 million barrels, according to Bloomberg estimates.

Saudi Arabia will probably forge a compromise for production cuts to be taken over coming months instead of all at one time, analysts said.

``Everyone recognizes that oil needs to be taken off the market,'' Morse said in a phone interview. ``If they cut a million, they will almost certainly have to go in for a second round of cuts.''

OPEC members will meet again in Algeria in December.

I don't agree with some of these statistics.

Iran set its budget based on $45 pb rather than $100. Where do they get 100???????

It says a breakeven point of $100.

Cost of oil production in that region is from $8 up to a macimum of $20, not $100.

Maybe the $100 takes into account investment required or already put in place in replacing reserves, production technologies etc?

Lifting cost is not the whole cost is it.

Humm,

You are saying the cost of any new production is above $100. So the prie fall results in loss for those countries invested in oil. Thos who plan to invest, like USA will stop doing so. The mid east countries will dominate the market again.
Is that right?

Oil Falls to 16-Month Low, Gasoline Tumbles, as Demand Declines

By Mark Shenk

Oct. 22 (Bloomberg) -- Crude oil fell more than $5 a barrel to a 16-month low and gasoline tumbled as weakening fuel consumption outweighed prospects of a production cut by OPEC at a meeting this week.

U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, an Energy Department report today showed. The financial crisis that's curbed the nation's energy use is spreading to emerging markets. OPEC will decide on Oct. 24 to lower output by at least 1 million barrels a day, according to a Bloomberg News survey.

``The market is more concerned about the economy than anything else,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``Until there is a recovery of the financial system and the economic picture, oil will trend lower, even if OPEC makes a cut of 1 million barrels plus.''

Crude oil for December delivery declined $5.07, or 7 percent, to $67.11 a barrel at 12:55 p.m. on the New York Mercantile Exchange. Futures touched $66.83, the lowest since June 14, 2007. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, are down 23 percent from a year ago.

Gasoline for November delivery declined 12.94 cents, or 7.7 percent, to $1.5625 a gallon in New York. Futures touched $1.5588, the lowest since February 2007.

Pump prices are following futures lower. Regular gasoline, averaged nationwide, declined 3.1 cents to $2.858 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices have tumbled 31 percent from the record $4.114 a gallon reached on July 17.

Emerging Markets

Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is heading for its second default in a decade. President Cristina Fernandez de Kirchner's decision hurt markets already reeling from slumping commodity prices and slower growth.

China's gross domestic product increased 9 percent in the third quarter from a year earlier, the weakest pace in five years, as the slowdown in the U.S. and other markets saps demand for Chinese products. China is the world's biggest oil consumer, after the U.S.

``I think the economic news from Asia is knocking the last leg from under the bulls,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``We're now getting evidence that China isn't immune to the financial crisis after all.''

Energy prices also fell because the euro sank to an almost two-year low against the dollar as stock markets declined around the world. The euro dropped 1.6 percent to $1.2848 from $1.3063 yesterday, after touching $1.2743, the lowest since Nov. 7, 2006.

U.S. Fuel Consumption

Fuel demand in the U.S. averaged about 18.7 million barrels a day during the four weeks ended Oct. 17, according to today's Energy Department report. Consumption in the four weeks ended Oct. 10 was the lowest since June 1999.

``The projections of a deep economic slowdown are scary,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Demand for every segment of the oil barrel is going to take a hit.''

U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, the report showed. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 3.9 million barrels a day, down 5.8 percent.

``The industrial slowdown will reduce use of diesel, people will cut back on discretionary driving, hitting gasoline demand, there will be less travel, hitting jet fuel demand, and there will be less shipping, which hits bunker-fuel demand,'' Mueller said.

Inventories

Crude oil inventories rose 3.18 million barrels to 311.4 million barrels, the report showed. It was the fourth-straight increase. A gain of 2.65 million barrels was forecast, according to the median of responses by analysts in a Bloomberg News survey.

The Organization of Petroleum Exporting Countries may disregard pleas from oil-consuming nations on the brink of recession and cut output this week, a Bloomberg survey showed.

Thirty of 33 analysts surveyed this week forecast that OPEC will lower production by 1 million barrels a day or more at the meeting in Vienna, which was brought forward from November. That's more oil than Australia consumes. OPEC also may signal plans for an additional reduction of at least 500,000 barrels a day by early 2009.

Brent crude oil for December settlement fell $4.73, or 6.8 percent, to $64.99 a barrel on London's ICE Futures Europe exchange. Futures touched $64.76, the lowest since May 9, 2007.

Negative ramifications of downward spiral could be considerable for oil sands and Canadian economy as a whole
NORVAL SCOTT

With files from Kevin Carmichael in Ottawa, David Parkinson and The Canadian Press

October 23, 2008

CALGARY -- The threat of a deeper recession triggered by the global financial crisis has pushed oil prices to a low not seen for 16 months, destabilizing the economics of new energy projects around the world.

Crude prices fell $5.43 (U.S.) to $66.75 a barrel yesterday - the lowest price since June 13, 2007 - after the U.S. Energy Information Administration said its oil reserves rose by 3.2 million barrels last week, well above industry expectations. The figures indicate slumping demand in the U.S., the world's largest oil consumer.

The pricing fall comes even though the Organization of Petroleum Exporting Countries will likely cut production at an emergency meeting on Friday. OPEC is expected cut its output by as much as two million barrels a day, a huge amount in historical terms, but the market doubts whether even a reduction of that magnitude would shore up sentiment.

"The worry is that what we're seeing in the U.S. will take place in the rest of the world too," said Bart Melek, senior economist with BMO Nesbitt Burns. "OPEC will no doubt respond, but it'll take some time for its cuts to have any impact."


If oil prices remain at these levels, planned projects around the world, including some in Alberta's oil sands, may be in jeopardy. Many newer developments in hard to reach areas are based on prices of at least $70 a barrel.'

These include projects in deep sea waters and the Arctic and, in many cases, are based on even higher oil prices.

Already, several Canadian companies including Nexen Inc., OPTI Canada Inc. and BA Energy Inc., have delayed or postponed the construction of new upgraders in the oil sands, reasoning that the projects are too expensive to proceed in the current environment.

Other projects, including Petro-Canada's $25-billion (Canadian) Fort Hills development, are also believed to be at risk. Analysts believe a long-term oil price of somewhere between $85 (U.S.) and $100 a barrel is needed to justify building an oil sands development including an upgrader now.

For the Canadian economy, the impact of the fall could be considerable. The commodity boom has helped offset the effects of weaker demand for Canada's manufactured goods by creating a windfall of wealth from its exports of oil and farm products. But the current decline in oil prices will reduce corporate profits and put strains on government coffers that swelled as the cost of crude surged to its peak of $147 a barrel in July.

The drop in the value of the loonie, which is tied to the price of oil, will also make imports more expensive, threatening to raise the cost of consumer goods when Canada is already in the midst of its weakest economic growth in 17 years.

But some argue that the fundamentals that drove oil to $147 - strong demand for crude from Asia, combined with an increasing scarcity of easy-to-develop crude - aren't about to disappear. Some analysts believe oil will find a floor at around its current levels, unless the global economy enters total meltdown.

"Is this [price] here to stay? Definitely not," said Martin King, a Calgary-based analyst for FirstEnergy Capital Corp. "OPEC will act to some degree, and the supply side is not going to be able to keep up. There's no bailout coming from non-OPEC production, and a [price rise] will come in a matter of months, not years."

Still, demand for gasoline in the U.S. is now down some 4 per cent from the same time in 2007, as consumers cut back on spending, leading to higher inventories and lower prices.

For Canadian companies, sluggish growth in global demand likely means a slowdown as new projects are pushed back, Mr. King said, adding that there could also be widespread layoffs.

Husky Energy Inc. chief executive John Lau said large oil companies with strong balance sheets will continue to develop oil sands projects, but smaller players may suffer.

"I'm quite sure major developers with deep pockets will continue to focus on oil sands development," Mr. Lau said. "Oil sands developments are very special projects. [But] in view of the high costs and also labour shortage, most of the of the small projects are facing a lot of challenges."

Oct. 23 (Bloomberg) -- Crude oil rose from a 16-month low as OPEC's president said that members had reached a consensus on the need to trim production and Iran said the cut may be as much as 2 million barrels a day.

There's no agreement on how big the reduction needs to be, the group's president, Chakib Khelil, told reporters in Vienna, where OPEC ministers arrived before a meeting tomorrow. Iranian Oil Minister Gholamhossein Nozari said OPEC must ``balance'' the market, after prices tumbled 54 percent from a record in July.

``If OPEC makes a cut of 1 to 2 million barrels tomorrow, prices should firm up and move higher in the short term,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.''

Crude oil for December delivery rose $1.06, or 1.6 percent, to $67.81 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $65.90, the lowest since June 13, 2007. Prices are down 21 percent from a year ago.

``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.

Oil producers to slash output
11 hours ago

Oil cartel Opec has agreed to cut production in a move that is likely to halt the recent slide in UK petrol prices.

Members of the organisation decided to cut output by 1.5 million barrels a day from next month in an attempt to shore up sagging prices.

Explaining the reasons for the move, a statement read at the end of the meeting in Vienna said prices had witnessed a dramatic collapse unprecedented in speed and magnitude.

Crude oil has tumbled to less than 70 US dollars a barrel amid global recession fears - less than half the 147 dollar high seen in July.

That has led to falling petrol prices at UK forecourts. Supermarket giants Asda, Tesco and Sainsbury all announced a new round of cuts.

The retailers joined oil firm Total in slashing 3p off a litre of unleaded to take the price down to 94.9p. Morrisons is also cutting petrol costs.

The last time petrol was 94.9p at Asda was last October, and the supermarket said the announcement marked the third time it had cut its petrol prices in a fortnight.

But the decision by Opec ministers failed to halt the slide in oil prices on Friday. Light, sweet crude on the New York Mercantile Exchange - the benchmark price - was at 64.51 US dollars, a drop of more than three US dollars in the session as global recession fears continued to depress world markets.

Oil prices had edged up from their 16-month low below 67 dollars a barrel to around 69 dollars ahead of Friday's meeting.

Motoring body the Automobile Association (AA) welcomed the latest price cuts, but warned that moves by Opec to slash production meant that the recent easing in petrol price could be brought to an end.

Drivers face rise in price of petrol
Motorists have been warned that the price of petrol could rise by up to 5 pence a litre after members of the OPEC oil cartel threatened to cut production.

By David Millward, Transport Editor
Last Updated: 12:44AM BST 24 Oct 2008

Russia is likely to join with OPEC in restricting supply in an attempt to drive up the cost of oil. This will lead to a rise in petrol prices just weeks after drivers finally began to see costs on the forecourt come down.

Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers.

But analysts now believe the end is in sight for drivers' recent honeymoon which has seen the cost of unleaded drop to less than a pound a litre .

OPEC production is almost certain to be reduced at the cartel's emergency meeting in Vienna today (Fri). As a result even the most conservative analysts expect a rise of $10 a barrel.

A two dollar increase in the price of petrol adds roughly a penny to the pump price, so motorists could face a five pence a litre rise by Christmas, experts have warned.

The rise - equivalent to another 22.5p on a gallon of petrol - means filling up an average family car, such as a Vauxhall Astra, will cost around 2.50 more at 50.

An AA spokesman said: "Our fear is that they will cut production to either hold prices where they are or start pushing them up.

"If prices do go up then people will be travelling less and have less disposable income for things like Christmas presents for their children.

"But the oil market is hostage to a number of things from political instability, the failure of a refinery or a natural catastrophe."

"I think OPEC will cut production," said Ray Holloway, director general of the Petrol Retailers Association.

"That and the fall in sterling means that forecourt prices could start rising in November and will remain high until the end of the year."

Having hit $147 a barrel in July, oil has been trading at less than $65 a barrel as demand has fallen amid fears of a global recession. Iran - one of the biggest OPEC producers - has already called for output to be slashed by two million barrels per day as they want the cost to rise to $100.

Mr Holloway's prediction for the OPEC meeting was endorsed by other analysts.

"From their point of view, OPEC members will have to increase prices," said Azfar Shaukat, director of oil and gas at consultants, Mott MacDonald.

"The price of oil has come down to a level that is not sustainable, especially given that during the middle of the year people were committed to projects that needed high revenue.

"We will see an increase and if I was to put my finger into the air, I would suspect it would be a figure of $75 to $80 a barrel.

"But it is a difficult market now and people don't want to be seen to be profiteering."

Mr Shaukat also believed that the prices could go even higher next year, with oil prices approaching $100 a barrel in the spring.

A similar view was expressed by David Smith, an analyst with Celerant Consulting.

"I am surprised that the Saudis haven't intervened more actively already," he said.

"It is pretty certain that they will cut production as they have enjoyed the benefit of high oil prices for some time.

"The more hawkish members will be determined to get prices up and I think many would be comfortable with prices at around $80 a barrel."

"But in the end you can't beat market forces, even though if there is some sabre-rattling, it will have an impact."

The only factor which could tie OPEC's hands is the fear that demand for oil would slump if it forces up the price too high.

At the same time petrol prices could also be forced up by the collapse of sterling against the dollar, which is the currency in which oil is traded.

This is not only bad news for the motorist, but the economy as a whole.

More costly fuel also pushes up the price of delivering goods to shops and supermarkets, which will add to inflation.

Despite accusations that retailers have been slow to pass on the full amount of recent price falls to motorists, the forecourt war has seen Sainsbury's announcing another cut, bringing petrol down to 94.9 pence, the same price as ASDA.

In addition ASDA promised that it would hold petrol down irrespective of the outcome of the OPEC meeting in Vienna.

But this could be only short term relief for motorists, especially with growing fears that the Government could also be ready to impose the delayed two pence a litre increase in the fuel levy in April.

In July Alistair Darling, the Chancellor, bowed to pressure from motoring groups shelved the rise due to come into force at the start of this month.

But the collapse in oil prices has cost the Treasury dear in recent months.

Having enjoyed a 2.5 billion windfall in the first half of the year, when oil prices soared above the $84 a barrel it budgeted for, the slump means that revenue is now less than it predicted.

Motoring groups fear that this and falling pump prices may make the temptation to impose the levy irresistible.

The world is running out of oil....not.

smiler o---------'Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers'.

It was inevitable that petrol prices were going to fall as the ppb fell, Gordon Brown new this as did my aunt Muriel (92), he was trying to get the credit for it, another cheap shot from this shrewd cookie who sold our gold at the bottom, put us all in hock, reneged on his promise of a referendum, sold out to europe and shrewdly paid 100 for a haircut.
2517

Aye ;) , out of Interest what is the price down in sunny Cornwall, its 98/97 ish this End

NORTH WEST LONDON 98.9 TO 101.9P