Crude oil fell for a third day in New York on concern Hurricane Katrina will slow economic growth in the U.S., the world's largest energy user.
The storm could cut economic growth by 0.5 percent during the rest of the year, U.S. Treasury Secretary John Snow said yesterday. An ABC News/Washington Post survey said U.S. consumer confidence fell to its lowest since May. U.S. demand for oil, which accounts for a quarter of global consumption, is forecast to grow by 1.4 percent in the second half of the year.
"Slower U.S. growth may reduce growth in oil demand in the second half of the year," said Dariusz Kowalczyk, senior investment strategist at CFC Seymour Ltd. in Hong Kong. "We are seeing proof of reduced U.S. consumer confidence," reports Bloomberg.
According to Forbes, Crude for October delivery dropped $1.61, or 2.4%, to close at $65.96 a barrel on the New York Mercantile Exchange. The benchmark contract hasn't closed at a level that low since Aug. 23.
October unleaded gasoline gave up 12.87 cents, or 5.9%, to close at $2.055 a gallon, after trading as low as $2.04, a level not seen since last Monday. October heating oil ended the session at $2.0543 a gallon, down 3.68 cents.
"This week, markets will continue to be driven by products, and in particular gasoline, which will have downward pressure from refineries coming back up and imports of products from Europe, which will start arriving in a couple of weeks," said James Williams, an economist at WTRG Economics.
The International Energy Agency announced plans Friday to make 60 million barrels of crude oil and refined petroleum products available to the global market over the next month in response to Hurricane Katrina.
Also, starting Wednesday, the Japanese government will begin releasing 7.3 million barrels of private-sector oil reserves to cope with U.S. supply disruptions in the aftermath of Katrina, according to a media report.