Christian Schmollinger and Grant Smith
Friday, October 31, 2008
Oct. 31 (Bloomberg) — Crude oil fell in New York, poised for its biggest monthly drop since trading began in 1983, on concern that the decline in the U.S. economy will curb fuel demand in the world’s largest energy user.
Oil retreated, taking this month’s decline to 37 percent, after the U.S. Commerce Department said yesterday that gross domestic product contracted in the third quarter at the biggest annual pace since 2001. Showa Shell Sekiyu K.K., Royal Dutch Shell Plc’s Japanese unit, will cut its crude processing by 7 percent during the fourth quarter on falling domestic demand.
“The outlook for demand remains weak while we wait for economic rescue measures to feed their way through the system,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Even in emerging markets the growth there is likely to be lower than was previously expected.”
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Crude oil for December delivery fell as much as $2.84, or 4.3 percent, to $63.12 a barrel. It was at $63.12 a barrel at 10:46 a.m. London time on the New York Mercantile Exchange. Oil’s monthly decline may surpass February 1986 as the worst month ever, when it dropped 30 percent to $13.26 a barrel.
Prices have tumbled 56 percent from a record $147.27 on July 11 and are down 32 percent from a year ago. Futures dropped $1.54, or 2.3 percent, yesterday to settle at $65.96 a barrel.