Oil Price Down the Drain Due Credit Crisis and Gas Conflict

Posted by Oilism.com on January 21st, 2009 at 05:31am

By signing the gas agreement between Russia and Ukraine the oil price fell back sharply. The price of a barrel of U.S. light crude oil now hovers around 34 dollars, a decrease of over 7 percent with earlier this week.

In December 2008, crude oil prices fell for the first time since the summer of 2004 under the 40 dollar per barrel barrier. In July 2008, oil prices showed a record of more than 147 dollars a barrel.

The oil price now strongly react on the developments in the Middle East and the gas conflict between Russia and Ukraine. According to the Ukrainian Prime Minister Julia Timosjenko Russian gas will continue to flow to Ukraine and other European customers as from yesterday.

Credit Crisis & Oil demand
The oil price falls due a weakening oil demand. After 25 years of growth, the demand for oil in 2008 decreased by 0.3 percent. The International Energy Agency (IEA) has estimated that the worldwide oil demand in 2009 will fall further, probably by 0.6 percent.

For 2009, the IEA expects we will see a bottom in the oil demand, lowering with 940,000 barrels of crude oil per day to 85.3 million in total. “It’s the biggest change in our estimate over the last couple of years,” said David Fyfe of the IEA chief marketing officer.

In earlier reports, the institute published a growth for 2009 in oil demand after the losses of 2008, this mainly based upon the increasing demand of the emerging economies. But, these estimates are now showing that the Chinese oil demand will grow with just 90,000 barrels a day, which is the lowest increase in eight years time.

Under China Oil+ Middle East+ OPEC+ Oil Price 2009+ Oil and gas+ Oil politics+ Russian Oil & Gas