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Crude prices plunge below $80 amid global sell-off

(Xinhua)
Updated: 2008-10-11 09:25

NEW YORK -- Crude prices plunged below $80 dollars a barrel Friday amid global sell-off on rising concerns of a worldwide recession and shrinking energy demand.

Light, sweet crude for November delivery fell 8.63 to settle at77.70 dollars a barrel on the New York Mercantile Exchange, the lowest settlement price in 13 months.

In this Oct. 3, 2008 file photo, an oil pump is seen in the desert area of Sakhir, Bahrain, in the Persian Gulf. [Agencies]

"It is clear the many market participants have thrown in the towel as witnessed by the double digit correction in the stocks of companies that comprise the energy complex," Wall Street Strategies' senior research analyst Conley Turner told Xinhua.

Energy stocks have fallen alongside global sell-off on fears that financial crisis could lead to worldwide recession. Shares of Exxon Mobil Corp., one of the largest energy companies in the world, hit a 52-week low on Friday.

"The selling is by all intents and purposes has become indiscriminate. Fundamentals clearly does not matter in this environment as fear appears to be the prevailing sentiment," said Turner.

"Also, in an effort to satisfy redemptions, it appears that many funds are selling their more profitable energy positions en masse," he added.

Also on Friday, the International Energy Agency (IEA), a Paris-based energy watchdog agency, cut its forecast for oil demand this year by 240,000 barrels per day and 440,000 barrels per day for 2009. The IEA now expects global oil demand to total 86.5 million barrels per day this year and 87.2 million barrels per day next year.

Crude has lost almost 50 percent of its value since hitting a record of 147.27 dollar a barrel on July 11 as the financial crisis drives down energy demand.

The Organization of the Petroleum Exporting Countries said Thursday it will hold a special meeting on Nov. 18 to discuss how the economic crisis is affecting oil prices. The head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.

"This is clearly turning out to be the buying opportunity of a generation for oil and oil related stocks," said the analyst.

"The caveat is that stability needs to sets in. There is significant price and value dislocation in this market which in the long run spells opportunity," said Turner.