Oil prices show little movement despite conflicting data on unemployment, future demand

Source: Agencies  |   2008-11-8  |     ONLINE EDITION

OIL prices were steady yesterday after this week's giant sell-off, despite a government report showing the unemployment rate hit a 14-year high last month and predictions from an international energy agency that put the price of crude at US$200 per barrel by 2030.

Light, sweet crude for December delivery rose 27 cents to settle at US$61.04 a barrel on the New York Mercantile Exchange. But the contract dropped below US$60 in overnight electronic trading for the first time 19 months.

The US Labor Department said yesterday that the country's unemployment rate hit 6.5 percent in October as another 240,000 jobs were cut, matching the worst jobless rate since March 1994. So far this year, a staggering 1.2 million jobs in the US have disappeared.

The job losses are yet another sign that the country is in a recession and that consumers and businesses will cut back on energy use.

Most industry experts, however, believe that the decline in crude prices will not last.

The International Energy Agency yesterday nearly doubled its forecast for the price of oil over the next 20 years, citing rising demand in the developing world as well as surging costs of production.

According to a summary of its World Energy Outlook, the IEA hiked its forecast for the price of a barrel of oil in 2030 to just over US$200 in nominal terms, compared with its forecast last year of US$108 a barrel. Measured in constant dollars, the IEA forecasts oil at US$120 a barrel in 2030, up from last year's forecast of US$62.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said neither number had much influence on traders yesterday.

"That jobs report was definitely lousy, but yesterday's decline in the (crude) market baked that bad number into yesterday's trade," he said.

On Thursday, benchmark crude prices fell 7 percent for the second time in as many days.