Oil prices have been plunged in another violent sell-off on Friday, briefly tumbling below USD 78 a barrel as investors grow more pessimistic about the prospects for resolving a mushrooming global economic crisis.
A barrel of oil hasn't been this cheap in 13 months. The steep losses came as Wall Street extended its staggering decline for an eighth straight day and headed for its worst weekly drop ever.
The Dow Jones industrial average was down more than 500 points in mid-afternoon trading. "Oil is mirroring the stock market right now.
There's a total lack of confidence. It's fear driving more fear," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
Light, sweet crude for November delivery fell USD 8.01 to USD 78.61 a barrel on the New York Mercantile Exchange, after earlier falling to USD 77.28, its lowest level since 11th September 2007.
Crude has now lost about 47 per cent since hitting a record USD 147.27 on 11th July, tumbling as a deepening credit crisis caused by the subprime mortgage fiasco wreaks havoc around the globe and drives down energy demand.
Investors have shrugged off an array of market-stabilizing efforts by world governments, including a USD 700 billion US financial rescue plan, several bank bailouts and a coordinated interest rate cut by the Federal Reserve and central banks around the globe.
Oil market traders were also fixated on signs of falling energy demand around the globe.
The International Energy Agency on Friday cut its global oil demand forecasts for this year and 2009, pointing to the worsening economic conditions and the tight credit supply.
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