UPDATED: 07:18, Sep. 15, 2006
Oil prices plunged below $63 a barrel Friday after OPEC lowered its oil-demand forecast for the rest of the year.
The decline in crude-oil futures came despite thwarted attacks on two oil facilities in Yemen, highlighting a recent shift in energy-market psychology whereby traders are focused on the relatively comfortable balance between supply and demand as opposed to hypothetical supply threats.
However, Fimat USA analyst John Kilduff said in a research note that geopolitical uncertainty, which helped push prices to an all-time high of $78.40 in July, could eventually re-ignite energy markets.
"In the end, our bias still has to remain with the upside," said Kilduff. "It is only for the moment that psychology has shifted more to an economic track, and even there, we don't see the global economy breaking down, only a softening at the margins."
The Federal Reserve said Friday that the nation's industrial output unexpectedly fell by 0.1 percent in August, reflecting weakness in manufacturing and declines in mining and utility production. Analysts had been looking for a small increase.
Some worldwide economic softening was acknowledged on Friday by the Organization of Petroleum Exporting Countries, which said fourth-quarter demand for its oil would be 320,000 barrels a day lower than previously forecast, or 28.86 million barrels per day.
In 2007, OPEC expects demand for its crude to average 28.1 million barrels per day, or 800,000 barrels per day less than the 2006 average, in part because non-OPEC supplies are rising. As a result, some analysts believe the Vienna-based cartel, which is pumping close to 30 million barrels a day, may end up cutting its output by 1.5 million barrels a day or more.
In late morning trade, light sweet crude for October fell 92 cents to $62.30 a barrel on the New York Mercantile Exchange. Oil prices have fallen by more than 20 percent since the July peak.
Retail gasoline prices, now averaging $2.55 a gallon nationwide, have fallen about 15 percent in the past month and analysts say further declines are likely.
Nymex natural gas futures, which plunged 10 percent Thursday to a two-year low after government data revealed surging inventories, rebounded slightly. October natural gas rose 8.7 cents to $4.98 per 1,000 cubic feet.
In other Nymex trading, gasoline futures rose by less than a penny to $1.55 a gallon, while heating oil futures fell 1.6 cent to $1.695 a gallon.
Remark: The oil price trend will largely affect the market of the plastic products, and thus the CD jewel Case and DVD cases, CD DVD manufacturing...
Source: The Associated Press