Oil below $87 after OECD cuts growth forecasts
The price of oil fell below $87 a barrel Wednesday after the Organization for Economic Cooperation and Development cut its growth outlook for the U.S. and the 17 European Union countries that use the euro currency.
By early afternoon in Europe, benchmark oil for January delivery was down 73 cents to $86.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents to finish at $87.18 a barrel on the Nymex on Tuesday.
The Paris-based OECD said Tuesday that the combined economy of the 17 euro countries will contract by 0.4 percent this year, worse than May's 0.1 percent forecast. For 2013, it is expected to contract a further 0.1 percent.
The OECD also downgraded its forecasts for the U.S. economy. Even if the White House and Congress strike a budget deal before Jan. 1 and avoid the so-called fiscal cliff of automatic tax hikes and spending cuts, the OECD said the U.S. will grow by only 2 percent next year, down from May's forecast of 2.6 percent.
Traders said weak economic growth would likely hurt demand for energy.
Michael Hewson, senior market analyst of CMC Markets, said the OECD report refocused concerns on "the toxic effect the European crisis continues to have on global growth prospects."
Statistics from the Association of the German Petroleum Industry quoted in a report by JBC Energy in Vienna showed that German gasoline consumption in September fell around 11 percent on the year.
Business Photo Galleriesview all
- 20415Oklahoma weather: Crews work to clear storm damage in Oklahoma City as the state braces for severe weather Sunday.
- 7078Oklahoma Severe Storm Updates
- 7023OKC Thunder: Thunder trio praise fans before potential departures
- 6616OKC Thunder GM Sam Presti won't amnesty Kendrick Perkins
- 5593Student shot dead during botched home invasion
- 4449Wild hogs continue to be a growing menace across Oklahoma
- 4211Oklahoma State football: Todd Monken thinks Wes Lunt should've stayed in Stillwater