Oil prices fall below $65 in Asia

Light, sweet crude for December delivery pared earlier losses and was down 53 cents to $64.77 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. Oil prices have fallen by about 56 percent since peaking at $147.27 a barrel in mid-July.

By ALEX KENNEDY
The Associated Press

11/6/2008

SINGAPORE — Oil prices slipped below $65 a barrel Thursday in Asia amid as renewed concerns about the severity of a global economic slowdown triggered an exodus from stocks and commodities.

Light, sweet crude for December delivery pared earlier losses and was down 53 cents to $64.77 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. Oil prices have fallen by about 56 percent since peaking at $147.27 a barrel in mid-July.

Stocks fell throughout Asia on Thursday, led by Japan’s benchmark Nikkei 225 stock average, down 6.5 percent. The Korea Composite Stock Price Index dropped 7.6 percent and Hong Kong’s Hang Seng Index slid 7.1 percent.

Asian markets followed a 5 percent plunge in the Dow Jones industrial average Wednesday, a day after Democrat Barrack Obama was elected as the next U.S. president.

Further proof of the scale of the downturn in the world’s largest economy came with news that the U.S. services sector, the largest component of the country’s gross domestic product, contracted sharply in October as new orders and employment fell.

“The overriding factor is still the gloom in the global economy,” said Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. “Oil took sentiment straight from the stock market.”

Oil prices overnight fell $5.23 to settle at $65.30 on news of rising U.S. gasoline inventories.

For the week ended Oct. 31, gasoline inventories rose by 1.1 million barrels, or 0.6 percent, which is 1.3 percent below year-earlier levels, the Energy Department’s Energy Information Administration said in its weekly report.

Analysts expected stockpiles of the motor fuel to fall by 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Demand for gasoline over the four weeks ended Oct. 31 was 2.3 percent lower than a year earlier, the report said.

Crude-oil inventories remained at 311.9 million barrels, 1.5 percent above year-ago levels. Analysts had expected a boost of 500,000 barrels.

Oil prices will likely see more large swings as investors struggle to gauge the severity of the global economic downturn, Rigby said.

“It’s amazing how volatile the market is. It’s trying to find its equilibrium,” Rigby said. “The reaction to news is extreme.”

Prices rose $6.62 a barrel on Tuesday on speculation the Organization Petroleum Exporting Countries may cut production at its next meeting in December.

OPEC last month said it would cut output quotas by 1.5 million barrels a day in addition to a 520,000 barrel cut announced earlier.

“$60 a barrel seems to be a strong psychological floor price, especially for OPEC,” Rigby said. “The market is looking to see just how much those cuts impact supply.”

In other Nymex trading, gasoline futures rose 1.06 cents to $1.435 a gallon. Heating oil dropped 0.24 cent to $2.0523 a gallon while natural gas for December delivery rose 3.3 cents to fetch $7.282 per 1,000 cubic feet.

In London, December Brent crude fell 33 cents to $61.57 on the ICE Futures exchange.