Oil prices fall below US$58

11-Nov-05

Oil prices fell to their lowest level since July, sliding below US$58 as growing US energy stockpiles increased concerns about faltering demand. The US Energy Department's report showed a much greater-than expected 4.5 mln barrel gain in crude and 4.2 mln barrel rise in gasoline stocks, indicating that supplies were not short going into winter. December Brent futures contracts slipped to US$55.61 a barrel, while US benchmark December-dated contracts declined to US$57.85. Terror attacks in Jordan, continuing civil unrest in France and fears of bird flu spreading would ordinarily cause prices to rise, not plummet. But it appears that a downtrend in oil prices appears to be entrenched for now, and the market is seizing on any negative evidence. Though the International Energy Agency revised down its forecast for growth in global demand in 2005 and 2006, the market was largely unmoved by the report. Oil prices have now fallen by over US$13 since reaching a record US$70.85 on Aug 30 - the day after Hurricane Katrina struck the Gulf of Mexico and severely damaged major oil installations in the region.