New Delhi US Crude for September delivery settled down at $112.87 a barrel on the New York Mercantile Exchange finishing at it's lowest point in more than 3 months.
This was a result of concerns about falling demand and a weaker dollar. The Organisation of Petroleum Exporting Countries (OPEC) reaffirmed its prediction that demand for crude in 2009 will be a 1,00,000 million barrels down from an increase of 1 million barrels a day in 2008. It would be the lowest level of worldwide demand growth since 2002, according to OPEC.
Oil rose as high as $115.35 a barrel earlier on Monday as Tropical Storm Fay neared hurricane strength and approached Florida's Gulf Coast. However, prices turned lower after the oil giant Royal Dutch Shell (RDS ) said the storm would miss most of its facilities in the Gulf of Mexico.
Relief from Fay allowed investors to focus on a downturn in global demand, which has driven oil down about 23 per cent from is mid-July record of $147.27 a barrel.
Investors also see falling demand in emerging economies such as China and India, which were responsible for much of oil's rise. "Weakness in developed economies translates into weakness in developing ones," says Associate economist with Moody's Economy.com, Chris Lafakis.
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