Commodity Daily News

Has the Record Oil Slide Reached Its Bottom?

On Tuesday the Crude Oil prices declined as much as 2.3% to below $39 a barrel, extending its slide from a record $147.27 a barrel in July. The primary factor that has been guiding the market is the concern about Oil demand amid the global recession. Tuesday's losses came after weak U.S. government data showed the economy of the world's biggest energy consumer shrank 0.5% in the 3rd quarter as the credit and housing crisis continue to worsen.

The United States Energy Information Administration (EIA) expects global Oil demand to shrink in 2008 and 2009 due to the financial turmoil, marking the first decline in Oil demand since 1983. Previously, the demand from emerging markets such as China had pushed Oil prices to their peak of above $147 a barrel in July. However today, even the Asian economies appear to be suffering from the global recession.

The Organization of Petroleum Exporting Countries (OPEC), which has already agreed to slash global Oil supplies by 5% in response to collapsing demand as a result of the economic slowdown, may hold an emergency meeting before its next scheduled gathering in March 2009. The cartel's President Chakib Khelil said on Tuesday that the organization will review the market again and cut supply again if Crude continues its slide.