Oil price drops below $70 after stock markets falter

04 September 2009

Bourses lose value after concerns over credit cutbacks in China

Crude oil prices fell below $70 a barrel as stock markets fell during the week ending 3 September.

The US’ October West Texas Intermediate (WTI) contract was trading at $68.90 a barrel, down $1.30 from 27 August.

Meanwhile, Europe ’s October Brent contract was trading at $68.30, down $2.50 a barrel from a week before.

The international oil cartel Opec’s average of its 12 members’ oil prices was $66.64 on 2 September, $3.69 a barrel lower than seven days earlier.

Brent and WTI had both fallen below $68 a barrel on 2 September as equity markets worldwide tumbled because of fears that China would begin to cut back credit it makes available to companies.

The next day a report from the US’ Department of Energy showed that gasoline demand had started growing and that stock of oil in the world’s biggest energy consumer had fallen by 400,000 barrels to 343.4 million barrels. This halted any further falls, according to analysts at Barclays Capital, the investment arm of the UK bank.

The Barclays analysts say oil is trading comfortably in the $65-75 a barrel range they forecast for the third quarter, with little chance of further price falls.

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