Crude oil tumbled and gasoline fell to a two-year low after a case of anthrax was confirmed in New York City, spurring concern that demand for fuels will decline as people stay closer to home.
An NBC Nightly News employee tested positive for anthrax, MSNBC reported. The news contributed to a decline in U.S. stocks today, as investors sold shares on expectations that a public health scare would hurt a US economy already damaged by the Sept. 11 terrorist attacks.
"There seems to be gloom and doom," said Chester Irvin, a broker at ABN Amro Inc in New York. "People were finally starting to feel safe, starting to get in their cars, and now all of a sudden they'll be putting their travel plans off again."
Crude oil for November delivery fell US$0.84, or 3.6 percent, to US$22.50 a barrel on the New York Mercantile Exchange.
Prices were little changed this week and are down 19 percent since the attacks, which weakened an already slowing economy.
Gasoline for November delivery fell US$0.263, or 4.2 percent, to US$0.601 a gallon, on the Nymex, the lowest closing price since Oct. 8, 1999.
Crude oil had climbed to US$23.98 in early trading, the highest price since Sept. 24, on concern the US and UK might widen their war against terrorism beyond Afghanistan to oil producers in the Middle East.
The anthrax case -- the fourth this year in the US -- was revealed after the International Energy Agency forecast that oil demand would rise at the slowest rate in at least 15 years, after the Sept. 11 attacks reduced jet travel and slowed demand from motorists, truckers and industrial users.
Consumption will increase by just 120,000 barrels a day, the smallest increase since at least 1986 and 400,000 barrels less than expected last month, said the IEA, whose 26 members use about three-fifths of the world's oil.
Daily use next year will rise by 600,000 barrels, two-thirds the average annual gain of the 1990s, the agency predicted.
"While there had already been a substantial reduction in global economic activity and a corresponding drop in oil demand before Sept. 11, the situation today looks even more disconcerting," the IEA said in its monthly oil report.
"If there's a big anthrax scare, it will hit consumer confidence," further hurting demand for gasoline, diesel and other fuels, said John Fry, an energy analyst at Barclays Capital in London.
OPEC, which supplies two-fifths of the world's oil, has cut output by 3.5 million barrels a day, or 13 percent, this year to support prices as demand slumped. Members are now considering an additional cut of up to 1 million barrels a day, OPEC Secretary-General Ali Rodriguez said earlier this week.
Such a reduction might be undermined by rising output from non-OPEC countries. Russian production has climbed this year by 500,000 barrels a day, the IEA reported. The world's third-largest oil producer has no plans to meet this month with OPEC officials to discuss output levels, an unnamed source in Russia's energy ministry said.
"OPEC can make all the decisions to cut it wants, but eventually, it'll find it's losing market share," said Peter Beutel, president of Cameron Hanover Inc, a US-based oil consulting firm.
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