Crude oil prices tumble to 27-month low

Crude oil futures tumbled to their lowest level since July 1999 at the New York Mercantile Exchange, though a late wave of short covering helped prices end the session well off their intraday lows. Front-month December crude futures fell 21 cents to close at $ 20.18 a barrel, their lowest level since July 1999 after hitting an intraday low of $ 19.69 a barrel.
Products futures ended mixed after falling sharply in line with crude's decline, with December heating oil losing 61 points to close at 58.26 cents a gallon and December gasoline managing to notch a gain of 27 points to settle at 54.40 cents a gallon. The early sell-off came amid signs of deteriorating economic conditions in the country and growing doubts about the ability of OPEC to lift prices, analysts and traders said.

The Labour Department reported that unemployment soared to 5.4 %in October, posting its biggest one-month jump since 1980. The dismal unemployment figure followed a report by the Commerce Department showing gross domestic product contracted by 0.4 % in the third quarter, bringing the longest economic expansion to an end.
"Between the GDP and the unemployment report, it's more piling up of the same evidence that the economic situation is poor," an energy analyst said. "The news doesn't bode well for energy consumption."
With economic concern weighing ever more heavily on the market, there is a growing belief among traders that OPEC, the cartel that controls 40 % of the world's oil supply, is all but helpless to boost sagging oil prices through a new round of production cuts. OPEC Secretary-General Ali Rodriguez said that there is a growing consensus among cartel members to slash output by about 1 mm bpd, though the exact volume and timing of the cut would have to be decided when OPEC oil ministers meet in Vienna on Nov. 14.

But OPEC President Chakib Khelil said that OPEC doesn't plan to cut production before Jan. 1. He said the size of an output cut will be decided at the Nov. 14 meeting but added that a cutbefore Jan. 1 isn't possible, because such reductions in output take 40 days to implement. Analysts said a production cut of 1 mm barrels going into effect Jan. 1 will be too little, too late to lift oil prices to OPEC's desired level.
Moreover, OPEC's inability to persuade non-OPEC producers to cut or freeze their output levels is seen as another obstacle to OPEC's efforts to boost oil prices, the analysts said. "The market has been disappointed that OPEC has not cut production immediately," said Phil Flynn, a trader and analyst at Alaron Trading in Chicago. "There is a lot of doubt that OPEC can pull off a production cut." In London, Brent crude from the North Sea was 15 cents higher at $ 19.77 per barrel.

Natural gas for December delivery finished at $ 3.248 per 1,000 cf after falling 4 cents. Packers benefited from strength in bacon and a seasonal demand boost for hams before Thanksgiving and Christmas.
Silver futures fell to contract lows at the Comex division of the New York Mercantile Exchange on selling by speculative commodity funds encouraged by weak economic data. The December contract fell 9.7 cents to $ 4.11 a troy ounce.