Oil Prices Drop Due to Concern Over Economy

Oil prices declined for the fifth straight day Thursday as worries about growing dissension within OPEC before the cartel’s year-end meeting and a possible recession spread throughout world markets.

“There is somewhat of a gradual dawning on people that OPEC probably is not going to raise prices at its December meeting and may have trouble reaching agreement on some issues, including production,” said Peter Beutel, energy analyst at Elders Futures Inc. in New York. “Many are expecting a tempestuous get-together.”

Beutel said the oil market “is finally getting a whiff of disinflationary pressure that had spread to commodities earlier.”

On the New York Mercantile Exchange, West Texas intermediate--the benchmark U.S. crude for December delivery--lost 9 cents to $18.98 after being down as much as 32 cents earlier in the session.

Home-heating oil for immediate delivery inched up 0.06 cent to 55.29 cents a gallon and unleaded gasoline added 0.08 cent to 50.97 cents.

Oil Inventories Up

On the European spot market, where oil is sold to the highest bidder, the United Arab Emirates’ Dubai Light--the key OPEC crude from the Persian Gulf--dropped 30 cents to $16.50 a barrel.

On the U.S. Gulf Coast spot market, West Texas Intermediate slumped 35 cents to $18.80 a barrel.

The threat of a recession that would reduce demand for oil comes on top of other negative factors such as large global inventories, the unusually warm weather in the oil-dependent northeastern United States and a relative calm Persian Gulf.

In this setting, the increasing likelihood that the influential Persian Gulf members of the Organization of Petroleum Exporting Countries will be forced to maintain the cartel’s $18-a-barrel benchmark price into next year has helped drive down prices further.