Crude Drops Below $40
Feb 10th, 2009 | By Doug Casey | Category: Financial NewsIn the energy market on Monday, oil drifted lower, with crude for March delivery closing at $39.56, down 61 cents. March reformulated gasoline lost just a third of a cent, to $1.2471/gallon.
Traders were clearly uneasy that the stimulus plan under debate won’t be enough to spur new demand for oil.
A measure of how pessimistic is the oil pit these days is that there was zero response to a statement from Abdalla Salem el-Badri, secretary general of OPEC, who said yesterday that the cartel’s nations have collectively postponed 35 oil-drilling projects among the 150 that had been in various stages of development.
El-Badri also said that OPEC has so far achieved 80% compliance with the production cuts mandated for January 1. Members agreed at that time to reduce production by a record 2.2 million barrels a day, adding to previous cuts of 2 million barrels.
Over the weekend, oil minister al-Shahristani of Iraq, which is not currently bound by OPEC’s production quota, said the group is likely to agree to further production cuts when its members gather next month. “We do believe that the price should be no less than $70 for a barrel,” he said.
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