Crude oil fell for a fifth day after President George W. Bush made no mention of oil producers in an address to the nation about US military action in the country's war on terrorism.
With worries abating that Middle East supplies would be disrupted, signs of slumping demand sent oil to its biggest weekly decline in almost two years. Prices are down 6.5 percent since the terrorist attacks last week, as jet fuel use plunged and concern mounted that the energy needs of manufacturers would weaken.
"Oil is reacting to the negative economic news," said Marianne Kah, chief economist at Conoco Inc, the fifth-largest US oil company. "Demand for jet fuel is falling and a lot of that will be put into heating oil this winter, so there will be no supply problem there."
Crude oil for November delivery fell US$0.76, or 2.8 percent, to US$25.97 a barrel on the New York Mercantile Exchange.
The 13 percent drop this week was the biggest since October 1999.
The expected military strikes have damped hopes for an economic recovery in the US. The Dow Jones Industrial Average has fallen 17 percent since hijacked jetliners destroyed the World Trade Center.
Dow Chemical Co., the largest US chemical maker, will miss third-quarter earnings estimates because of weakening demand for chemicals and plastics used in cars, appliances and construction.
Chemical companies account for about 3 percent of US petroleum demand.
Exxon Mobil Corp., the biggest publicly traded oil company, fell US$1.19 to US$35.83. Conoco Inc. was 8 cents lower at $27.22.
Delta Air Lines Inc, the third-largest US airline, was the latest air carrier to announce reduced flights and job cuts as ticket sales plummeted following the terrorist attacks. US airlines have cut 78,000 jobs since the attacks.
Jet fuel accounts for about 8 percent of US crude oil demand.
"We are going to have a painful period here where the airlines and hospitality industry especially are hurt, but the underlying economy is in pretty good shape," said Sarah Emerson, managing director of Energy Security Analysis Inc, a consulting firm in Wakefield, Massachusetts. "There will be a reallocation of where money is spent -- less for travel, but more for entertainment at home."
The US has mobilized air, sea and land forces, and targeted Afghanistan's ruling Taliban as the terrorists' allies and protectors. The Taliban refused to hand over terrorist leader Osama bin Laden and vowed a holy war against any invader.
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