Price of oil tumbles to $43 a barrel

| Thursday, December 02, 2004

Crude oil prices dropped off sharply for a second straight day Thursday, Dec. 2, trading near $43 a barrel.

The two-day slide of nearly $6 a barrel marks the biggest decline since the Gulf War as traders focused on rising U.S. fuel supplies and the lack of cold weather.

Analysts told The Associated Press that the selloff in oil prices was also being aided by comments from an OPEC official that the cartel is likely to agree to keep production at current levels when it meets Dec. 10.

Light, sweet crude for delivery in January fell $2.34 to $43.15 a barrel in afternoon trading Thursday on the New York Mercantile Exchange, marking the lowest price since early September.

U.S. prices plunged $3.64 a barrel on Wednesday after the Energy Department reported that the nation’s supply of distillate fuel, which includes heating oil, diesel and jet fuel, grew by 2.3 million barrels last week to 117.9 million barrels.

The combined two-session fall in crude oil prices is the fourth biggest in the Nymex’s history.

While there’s no likelihood of fuel shortages, traders say a cold snap in North America could deplete stocks and spur higher prices. But for now the demand on heating oil inventories seems limited, The AP reported. It is the strong demand for diesel by the trucking industry that is putting the most pressure on distillate fuel supplies.

The Energy Department reported that U.S. crude oil inventories grew by 900,000 barrels last week to 293.3 million barrels, or nearly 10 million barrels higher than a year ago.

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