Oil extends losses amid weak demand

18/02/2009

Oil prices have fallen further during trading this morning (February 18th) as investors predict that demand for crude and derivatives such as heating oil will fall further in the US.

By 5:16 Eastern Time, the New York Mercantile Exchange's main contract had dropped to $34.76 (£24.50) a barrel, down 17 cents.

The decline extends losses witnessed during trading yesterday, when crude fell seven per cent.

Reuters reports that the news comes as Goldman Sachs announces that it is looking to stay away from futures contracts for commodities such as crude and heating oil.

"Unlike an equity, which an investor can buy and hold, a long investment in a commodity cannot be held indefinitely," the group noted, indicating its lack of confidence in price recovery in the short term.

Meanwhile, demand data due to be published later today is likely to have a further downward effect on crude prices as experts predict that the appetite for crude and petroleum products such as heating oil is likely to have declined further.