Crude oil fell below $36 a barrel for the first time hitting the lowest point for four and a half years as traders fretted over weak global demand despite an OPEC output cut. Oil declined as much as 5.9 percent after the index of leading US economic indicators fell in November for the fifth time in seven months. The US Energy Department said consumption will be lower in 2009 because of the contraction. The Organization of Petroleum Exporting Countries agreed to reduce production by 2.46 million barrels a day at a meeting on Wednesday. “The continuing decline in demand is running ahead of supply cuts,” said Robert Ebel, chairman of the energy and national security program at the Center for Strategic and International Studies in Washington. “Right now OPEC has its fingers crossed. If this doesn't work, they will have another meeting soon and make another cut.” Crude oil for January delivery dropped $3.70, or 9.2 percent, to $36.36 a barrel at the 2:30 P.M. close of floor trading on the New York Mercantile Exchange. Futures touched $35.98, the lowest since June 30, 2004. Prices have tumbled 75 percent from a record $147.27 on July 11. The January contract expires on Friday. The more-active February contract fell $1.35, or 3 percent, to $43.26 a barrel. “Unless demand picks up appreciably, the front-month contracts will remain under pressure because nobody wants to take delivery,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We could see a lot of fireworks tomorrow.” Crude oil climbed more than $25 a barrel, the biggest gain ever, on Sept. 22, the day contracts for October delivery expired. Traders who sold oil in hopes the price would decline the following month had to buy back the same number of futures or be forced to deliver the underlying crude. JPMorgan Chase & Co. reduced its 2009 average oil price forecast to $43 a barrel from $69 amid slowdown.
