Oil Falls on Doubts Rescue Will Avoid Recession, Bolster Demand

By Mark Shenk

Oct. 15 (Bloomberg) -- Crude oil fell below $75 a barrel for the first time in more than a year on skepticism that a rescue of the world's banks will be enough to avoid a recession and stem a decline in global fuel demand.

Oil, which has followed movements in equity markets this month as the credit crisis deepened, fell as stocks dropped today. The Organization of Petroleum Exporting Countries cut its 2009 demand forecast for a second month because of ``dramatically worsening'' conditions in financial markets.

``The oil market is under a lot of pressure and nothing is going to change that anytime soon,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``We are entering a poor-demand cycle, which will put further downward pressure on prices.''


Crude oil for November delivery fell $2.36, or 3 percent, to $76.27 a barrel at 9:22 a.m. on the New York Mercantile Exchange. Futures touched $74.97, the lowest since September 2007. Prices, which are down 12 percent from a year ago, have dropped 48 percent from the record $147.27 a barrel reached on July 11.

OPEC, supplier of more than 40 percent of the world's oil, cut its forecast today for oil demand next year by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day. The 13-member group will hold an extraordinary meeting on Nov. 18 in Vienna, after a decision to trim supplies last month failed to stem a slump in prices.

A government report tomorrow may show that U.S. crude-oil and gasoline inventories rose last week, according to the median of responses by analysts in a Bloomberg News survey. The report will be released a day late because of the Columbus Day federal holiday Oct. 13 in the U.S.

Brent crude oil for November settlement declined $2.41, or 2.2 percent, to $72.12 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.