Oil falls below $37 - OPEC cut ignored

Slowing global economy and waning fuel demand continue to weigh on market.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Kenneth Musante, CNNMoney.com staff writer

Click the chart to track the latest commodity prices.

NEW YORK (CNNMoney.com) -- Oil prices fell below $37 a barrel Thursday, reaching levels not seen since June 2004.

Investors continued to shrug off an upcoming OPEC production cut announced on Wednesday, after which oil closed at a 4-1/2 year low.

U.S. crude for January delivery, which ceases being the front-month contract on Friday, fell $3.84 to settle at $36.22 a barrel. It was the lowest settlement price since June 29, 2004 when it settled at $35.66.

The February contract, which begins its front-month run next week, fell $2.94 to $41.67 a barrel.

On Wednesday, the Organization of Petroleum Exporting Countries, an international trade organization whose members supply about 40% of the world's oil, elected to cut production by 2.2 million barrels a day in January.

But investors were concerned about the slowing global economy's impact on crude demand, and that sent the price down $3.54 to $40.06 a barrel Wednesday, its lowest close since July 2004.

"They're wondering whether OPEC can enforce this cut," because the budgets of many OPEC nations are already stretched incredibly thin, said Nimit Khamar, analyst with Sucden Financial in London.

Investors had also largely ignored other OPEC production cuts made since September, totaling an additional 2 million barrels a day.

Falling demand: Oil prices have shed more than $100 a barrel since hitting a record high of $147.27 a barrel in July as worldwide demand began to decline.

In the United States, the world's largest oil consumer, supplies have been building as Americans cut back.

U.S. crude inventories increased by 500,000 barrels last week, according to the Energy Department.

"We've got more oil than we know what to do with at the moment," said Bob Thomas, head of the energy group at Porter & Hedges, a Houston-based law firm that represents oil companies.

Consumer in the U.S. drove 100 billion fewer miles over the past year, according to a government report.

"We're seeing demand slip everywhere, including China," said Khamar.

Rapidly expanding export-based economies of nations such as China and India are beginning to suffer as much as their counterparts in the developed world, where cash-strapped citizens are consuming less of everything.

"It may take a while for supply and demand to match up," said Thomas.

Looking long-term, the Energy Department said Wednesday that crude oil could rise again, reaching $130 a barrel in 2030 as global supplies diminish. But it also predicted that demand for fuel would rise by only 1 million barrels a day during that time period. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.