Crude futures fell under $62 a barrel Thursday (Oct. 6) to close at their lowest level since late July on growing perceptions that high energy prices may be fueling a decline in demand.
According to CBS MarketWatch, traders are worried that “rising prices are eating into demand, or worse, may have already tilted the global economy toward contraction,” said John Kilduff, an analyst at Fimat USA.
At the same time, “the process of extracting the hurricane premium continues,” he said.
Crude for November delivery fell $1.43, or 2.3%, to end the session at $61.36 a barrel on the New York Mercantile Exchange, a level not seen since July 27. The contract traded as low as $60.70 earlier.
Petroleum-products prices closed at three-week lows. November unleaded gasoline finished down 6.73 cents, or 3.5%, at $1.8405 a gallon, while November heating oil fell 6.41 cents to end at $1.9507 a gallon.
On Wednesday, the Energy Department reported declines in crude, motor-gasoline and heating-oil inventories for the week ended Sept. 30.
But total product supplies over the four-week period through Sept. 30 have averaged more than 19.9 million barrels per day, down 2.9% from the same period a year ago, the government data showed.
All in all, “it seems that despite tight gasoline supplies and refinery and production shutdowns, the October seasonal pattern of weak demand is trumping all else,” said Phil Flynn, a senior analyst at Alaron Trading.
Meanwhile, recovery in the hurricane-battered Gulf of Mexico showed sizable signs of improvement Thursday.
Just over 80% of daily oil output in the region was offline following Hurricanes Katrina and Rita, compared with 87% on Wednesday, the U.S. Minerals Management Service reported. Last Friday, 97.8% was shutdown.