LONDON, 4 December 2004 — Battered oil prices dived another dollar on yesterday as weak US jobs data deepened a slump driven by easing worries about winter supplies. US crude oil futures fell by $1 to $42.25 a barrel, renewing losses after the biggest two-day price fall since January 1991, during the first Gulf War.
Prices have sunk by more than $13 since October’s record peak of $55.67 and are back to levels last seen in September. London Brent was $1.17 lower at $38.98 a barrel. Oil’s rally this year was driven by synchronized economic expansion in the United States and China. This generated the fastest fuel demand growth in a generation, running down inventories and squeezing spare capacity.
This week’s sell-off was triggered on Wednesday by a US government report that showed distillate stocks, including heating oil and diesel, rose by 2.3 million barrels, helping to narrow the supply deficit compared with last year. Overall crude stocks are already well above last year’s levels as OPEC oil nations produce at the highest rate in 25 years. The Organization of the Petroleum Exporting Countries is to meet in Cairo on Dec. 10 to decide output policy for the first quarter of next year. OPEC’s reference crude basket fell to $35.42 a barrel on Thursday from $38.03 the day before, OPEC said yesterday. The fall takes OPEC’s crude to just $3.50 a barrel over the top of the $28-$32 target, identified by OPEC’s President Purnomo Yusgiantoro yesterday as an acceptable range for the organization’s crude.
Yusgiantoro also said Thursday that he will tender his resignation as the secretary-general of the OPEC by the end of this year.
Purnomo, who is also one of OPEC’s alternating presidents until the end of this year, said he will concentrate on his tasks as Indonesia’s mines and energy minister.
