Friday, December 5, 2008

Recession Lowers Fuel Demand

Dec. 4 (Bloomberg) -- Crude oil fell for a fifth day to the lowest in almost four years after a report showed U.S. fuel demand extended declines because of the country’s deepening economic slump.

The average amount of fuel products such as gasoline and diesel supplied by refiners for the past four weeks was 7.9 percent less than a year earlier, according to a U.S. Energy Department report yesterday. Royal Dutch Shell Plc said that a fire broke out at its Pernis refinery in the Netherlands, the largest in Europe.

“The macroeconomic picture is bleak, the engine of capitalism is stuck right now,” Stephen Schork, president of the Schork Group, said in a radio interview from Vienna. “There’s no reason why crude oil can’t go below $40 in the next six months.”

Crude oil for January delivery today dropped as much as $1.49, or 3.2 percent, to $45.30 a barrel on the New York Mercantile Exchange. That’s the lowest since Feb. 9, 2005. It was at $45.96 a barrel at 1:52 p.m. London time.

Futures have tumbled 69 percent after reaching a record $147.27 on July 11.

A large fire broke out today at the gasoline-making catalytic cracker at Royal Dutch Shell Plc’s 416,000 barrels a day Pernis refinery, the Rotterdam fire department said. Shell confirmed the fire in a statement on its Web site.

Crude oil may dip below $25 a barrel next year if the recession that’s slashing fuel demand around the world spreads to China, Merrill Lynch & Co. said.

Read it all here.

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