Oil dips below US$40 as US demand forecast dips and apprehensions rise over the stimulus package

12-Feb-09

As oil demand forecast in USA has been lowered by 400,000 bpd from the previous outlook, predicting demand will fall by 1.17 mln bpd this year from 2008 levels and apprehensions abound regarding Obama's stimulus plan, oil prices have dipped below US$40/barrel. US crude dipped to US$37.5 a barrel, while London Brent fell to US$44.6 a barrel. Fears abound that the stimulus plan disclosed by Obama administration will not stem the recession, even as the Senate voted to pass a US$838 billion economic rescue plan, initiating the process of tough negotiations over the final size and scope of spending and tax cuts aimed at reversing the deep recession. In a bid to stabilize deteriorating oil prices, OPEC has agreed to cut oil production further at it's next meeting on March 15.