mohar2008  

Oil prices fell below $ 38 a barrel Tuesday on the new evidence of weakness in the U.S. housing market and reduce the gross domestic product indicates that the worsening recession.

The report of the Ministry of Commerce showed that sales of new homes fell in November at the slowest pace in almost 18 years, while new home prices rose by the largest amount in eight months.

"The energy markets were mostly a reaction to bad news for the economy, and it seems as if you're waiting for something to happen, badly," said analyst Peter Beutel of Cameron Hanover oil.

A steady outpouring of gloomy economic news has pushed into the background to the events in the summer have led to price spikes, as the announcement by OPEC this month unprecedented production cuts, said the bag.

Prices are 73 percent since July, with the massive job layoffs and weak consumer spending on food away energy.

"Dude, it looks really bad for the beginning of 2009," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

"This is really hard to find something between now and the ceremony on time, which says that people feel better, go, they need to ship more packages," said Kloza.

Light sweet crude for February delivery fell nearly 5 percent, or $ 1.89, to $ 38.02 on the New York Mercantile Exchange. Prices fell as low as $ 37.79 earlier in the day.

Overnight in February contract fell $ 2.45 to $ 39.91 a barrel, after Toyota Motor Corp. projected its first operating loss since it reporting these figures in 1941.

Economists now believe, a slight decrease in economic activity in the third quarter has significantly deteriorated.

The Commerce Department said Tuesday, gross domestic product, the maximum level of economic health, fell at an annual rate of 0.5 percent in July-September quarter. Corporate profits fell 1.2 percent.

Some economists believe the economy, in the period October to December could be as high as 6 percent. If yes, what would be the worst quarterly decline since 1982.

The pain seems to have agreed on almost all levels of the economy. On Tuesday, shares of the card maker American Greetings Corp. share fell to its lowest level since the age of 21 years after that the company swung to a loss in the third quarter.

On Monday, Ogden, Utah-based oil company Flying J Inc. and two of its subsidiaries filed for Chapter 11 bankruptcy protection, with a sharp decline in oil prices and the lack of funding by the disruption in the credit markets.

Flying J operates 250 passenger seats and service stations in 41 states and six Canadian provinces.

"They will not be the last in the marketing or refining, which eventually lead to bankruptcy during the next year or so," Kloza said. "It is tough out there."

Toby Hassall, an analyst at investment firm Commodity Warrants Australia in Sydney, predicted crude prices could fall as low as $ 25 per barrel next year before recovery occurs.

OPEC said last week slash production by 2.2 million barrels per day, the biggest decline of all, reducing the quantity of oil each day by 4 million barrels, if all previous cuts are included in the price.

"It is time to stop the flow through them, but there are some doubts as to whether the full consent," said Hassall. "It does not surprise me if the OPEC cut again in January or February. It was a fairly significant deterioration in demand."

Meanwhile, the Iraq Oil Ministry announced that it will open the second round of licenses for the development of huge oil and gas fields. Iraq is located on more than 115 billion barrels of oil, but decades of war, UN sanctions, violence and sabotage have battered its oil industry.

The Iraqis are betting that oil will rebound. But even if it remains low, it does not matter, said the bag.

"You need money," he said. "You can not have near the same amount of money through the sale of data."

Oil continues to curve to the price of gasoline, consumers with one of the few bright spots in the deterioration of the economy.

Retail prices for gasoline now 23rd Week 4 July weakened to a national average of $ 1653 per gallon since Monday after the U.S. Energy Information Administration.

"This is the lowest price for the pump in almost five years, or since February 2004," analyst and trader Stephen Schork Schork wrote in his report.

Gasoline futures on Nymex fell 5.3 cents to 83.3 cents per gallon. Heating oil fell 2.7 cents to $ 1.3141 per gallon, while natural gas for January delivery rose nearly 17 cents to $ 5462 per 1000 cubic meters.

In London, February Brent fell more than 4 percent, or $ 1.73, to $ 39.72 a barrel on the ICE Futures Exchange.