[OIL PRICES] Organization of the Petroleum Exporting Countries, Crude Oil Declines After U.S. Financial-Rescue Plan Hits Snag
Crude oil fell, leading energy futures lower, after negotiations over the $700 billion financial bailout plan stalled, adding to concern that U.S. economic growth in the world's biggest energy-consuming country will falter. Oil prices dropped as much as 3.5 percent after House Republicans rejected the proposed rescue of the U.S. financial system, imperiling an agreement hours after an announcement that one was near. U.S. fuel demand over the past four weeks was down 5.3 percent from last year, a government report showed this week.
``The oil market is at the mercy of what is going on in Washington,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``If there isn't an agreement, prices will drop further because the economy will slow further and demand destruction will continue.''
Crude oil for November delivery fell $1.13, or 1.1 percent, to settle at $106.89 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Prices are down 27 percent from the record $147.27 a barrel reached on July 11. The contract is up 4 percent for the week.
Gasoline for October delivery declined 3.22 cents, or 1.2 percent, to settle at $2.6651 a gallon in New York. Heating oil fell 3.09 cents, or 1 percent, to settle at $2.9949 a gallon.
Oil prices may decline next week, according to a survey of analysts by Bloomberg News. Fourteen of 29 analysts, or 48 percent, said prices will decrease through Oct. 3.
The U.S. economy expanded at an annual rate of 2.8 percent in the second quarter, slower than the previous estimate, as consumer spending and trade contributed less to growth, the Commerce Department said today in Washington. The revised figures were down from an estimate of 3.3 percent last month.
GDP Forecasts Economists at JPMorgan Chase & Co. and Morgan Stanley this week cut third-quarter Gross Domestic Product forecasts, and Federal Reserve Chairman Ben S. Bernanke warned the economy may falter without the $700 billion bank rescue. The U.S. was responsible for 24 percent of global oil consumption last year, according to BP Plc.
Alon USA Energy Inc. restarted the fluid catalytic cracking unit at its Big Spring, Texas, refinery so the plant can resume full processing capacity of 70,000 barrels a day. Total SA, Europe's third-largest oil company, said it restored power to its Port Arthur refinery in Texas after Hurricane Ike, and plans to restart the plant.
Royal Dutch Shell Plc said it will delay planned maintenance on U.S. Gulf Coast refineries.
Brent crude oil for November settlement declined $1.06, or 1 percent, to settle at $103.54 a barrel on London's ICE Futures Europe exchange.
OPEC Production The Organization of Petroleum Exporting Countries would cut oil production to keep crude oil from falling below $100 per barrel, Ecuadorean President Rafael Correa said today in a television interview on the ETV Telerama network.
Ecuador, the producer group's smallest member, has struggled to meet its daily output quota of 520,000 barrels in recent months. Organization of Petroleum Exporting Countries members produce more than 40 percent of the world's oil.