Oil Falls for Fourth Day on Speculation Demand Growth Slowing

By Gavin Evans

Oct. 6 (Bloomberg) -- Crude oil fell for a fourth day in New York on signs slowing global economic growth will reduce demand.

World markets are oversupplied and the Organization of Petroleum Exporting Countries may review output levels for the first quarter of 2009, Iranian Oil Minister Gholamhossein Nozari said Oct. 4. Saudi Aramco, the world's largest state-owned oil company, yesterday cut its official selling prices for light crude exports to the U.S., the world's largest consumer.

``There are certainly brokers making downgrades to both U.S. growth and commodity prices generally,'' said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The market is really going to slow pretty sharply over the next six to nine months.''

Crude oil for November delivery fell as much as $2.28, or 2.4 percent, to $91.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $92 at 7:48 a.m. in Singapore.

The contract fell 9 cents to $93.88 a barrel on Oct. 3, the lowest settlement price since Sept. 16, after U.S. lawmakers approved a $700 billion bank-rescue plan and the country's Labor Department reported a bigger-than-expected, 159,000-drop in payrolls in September.

New York oil prices declined 12 percent last week as reports showed U.S. fuel demand the previous four weeks was the lowest in almost seven years and manufacturing shrank in September at the fastest pace since the last recession in 2001.

Brent crude oil for November settlement fell 93 cents, or 1 percent, to $88.33 a barrel on London's ICE Futures Europe exchange on Oct. 3.

Global Slowdown

As bad as the U.S. employment and manufacturing reports were, there is also concern about the financial ``stress'' the U.S. bailout may put on the rest of the economy, ANZ's Pervan said. The higher dollar, also weighing on oil, reflects expectations that the slowdown is spreading globally.

``The next step is for Europe and Asia to feel the pain,'' he said.

The dollar rose to a 13-month high against a basket of currencies, reducing the investment appeal of dollar-denominated commodities. The euro fell as low as $1.3658 in early Asian trading from $1.3772 in late New York trading last week, after Germany said it will guarantee personal bank deposits in a bid to stabilize the nation's banking system.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net