Oil prices hit 2 month lows as US demand shows signs of cooling

07-Oct-05

As per the EIA, total demand for crude oil products in the US was down 2.9% over the past 4 weeks from a year ago levels, gasoline demand fell 2.6% year-on-year, while distillate demand was down 3.8%. As US demand shows signs of cooling and as the world's energy watchdog said it may not need to release more oil from its strategic reserves, oil prices fell to 2 month lows. November-dated Brent futures contracts were down to US$ 58.62 a barrel while US benchmark November-dated contracts were down to US61.55. News of falling demand offset the impact of larger than expected falls in weekly US crude inventories, triggered by refineries operating at only about 70% capacity. Nearly a fifth of US refining capacity remains shut as a result of the joint effects of hurricane Katrina and Rita, and almost 15% is expected too remain shut for at least a few weeks more.