NEW YORK — Oil prices dropped more than six percent to below $88 a barrel on Monday as a global market rout churned concerns that faltering fuel demand could slow down further.
US crude ended $6.07 lower at $87.81 a barrel after hitting an eight-month low of $87.56. London Brent crude fell $6.57 to settle at $83.68 a barrel.
Crude prices have plummeted from a peak of over $147 a barrel set on July 11, as high fuel prices and the growing financial crisis slacken oil demand in the United States and other industrialized nations.
"The prevailing macro sentiment is now crystallizing around the notion that we are heading into a synchronized global slowdown, a mirror image of the across-the-board expansion we saw from 2004 to early 2007," said Edward Meir of broker MF Global.
Analysts are watching oil demand in China — which has helped fuel a six-year-long rally in commodities — for signs that the crisis is hitting consumption.
China, the world's No. 2 consumer, will not import gasoline for the second straight month and instead export the fuel due to heavy domestic stockpiles and a dip in demand.
"I think the market's starting to build this into prices," said Mark Pervan, senior commodities analyst at ANZ. "You would expect the market is now joining the dots and thinking ... this will probably flow through to China."
The drop in prices has caused some concern among OPEC members, while analysts are revising down demand outlook projections.
"Definitely there is worry. When the prices are so volatile, like rising to $140 and then dropping to below $90, it worries everybody," said Iraq's Oil Minister Hussain al-Shahristani.
Ecuadorean Oil Minister Galo Chiriboga said OPEC would analyze the impact of the global financial crisis on oil demand and set production levels in accordance.
Iran said $100 a barrel was too low and urged members to respect their output targets to prevent oversupply from worsening.
OPEC president Chakib Khelil said OPEC would seek to balance the market at its meeting in December. With editing by INQUIRER.net
