Oil prices hit new multi-year lows

Oil prices hit new multi-year lows

Oil prices sank to multi-year lows during Asian trade Thursday in a market dominated by declining demand and dismal economic news, analysts said.


In afternoon trade New York's main futures contract, light sweet crude for January delivery, fell 93 cents to 45.86 dollars a barrel.

The contract at one point fell as far as 45.30 dollars, its lowest point since January 12, 2005, after closing down 17 cents at 46.79 dollars on the New York Mercantile Exchange Wednesday.

Brent North Sea crude for January delivery dropped 1.19 dollars to 44.25 dollars after dropping to 43.80 -- its lowest point since February 20, 2005.

The Brent contract closed unchanged at 45.44 dollars Wednesday in London.

"This market is trying to find the bottom," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.

Hasegawa said there are no bullish factors in the market, which he sees reaching as low as 40 dollars a barrel.

Oil prices have plunged by about 70 percent since striking record highs above 147 dollars in July, pulled down by a widening global economic slowdown that weighs on demand, analysts say.

The Eurozone, Japan and the United States are in recession, and weak U.S. economic data on Wednesday added to concerns for demand.

The U.S. private sector lost 250,000 jobs in November, the largest decline in six years, according to the ADP National Employment Report survey.

"The macroeconomic backdrop to the oil market continues to worsen," said Barclays Capital analyst Paul Horsnell.

"We are now projecting that global (crude oil) demand will decline in both 2008 and 2009," he added.

The market shrugged off a U.S. Department of Energy (DoE) report showing crude inventories fell by 400,000 barrels in the week ending November 28, confounding market expectations for a 1.4 million barrel increase.

The DoE said petrol stockpiles dropped 1.6 million barrels, in contrast to estimates for a gain of 1.6 million barrels.

U.S. distillates, which include diesel and heating fuel, declined 1.7 million barrels, compared with market expectations for no change.

Photo: Reuters