Both crude and heating oil prices dropped slightly on NYMEX today, losing about 1% each.  Ever-present worries about low global energy demand continued be the dominant emotions on the commodities markets.  From Bloomberg.com:

“The bottom line is that you don’t have anything solid out there to support a sustained rally,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. “The financial crisis has led to economic weakness and falling demand in the U.S. The problems in the U.S. are now spreading to China and other developing countries.”

Analysts also predicted tomorrow’s energy report from the Energy Department would include news of U.S. crude stockpiles increasing by about 1 million barrels.

HEAT USA price experts were pleased to report a moderate decline in tomorrow’s retail prices, despite only incremental decreases in market prices.

HEAT USA Price Report
Evening projection (for Wednesday’s average price per gallon): DOWN $0.04

Crude oil prices, along with stock markets around the world, plunged again today. OPEC’s announcement this morning that it will cut oil production by 1.5 million barrels a day seemed to have no affect on falling oil prices and market pessimism. The deepening global economic slowdown and impending slump in energy demand continues to be the main concern of commodity traders, and it is apparently a big enough concern to outweigh a sizeable production cut by the organization that produces 40% of the world’s oil. An article on PBS Newshour Online summarizes the situation: “”OPEC has offered the market all the ammunition they had,” Robert Laughlin, a senior broker at MF Global Ltd. in London, told Bloomberg news. “With the bearish economic outlook and manufacturing in freefall, this accord is not good enough.”

The lack of impact made by OPEC’s production cut further confirms worries that the economic slowdown would spread worldwide and demand reductions would extend to huge oil consumers like China and India. Manufacturing around the world has slowed significantly, showing that a cycle of reduced demand and reduced supply has begun, with no end in sight. An article on Bloomberg.com notes that the historic nature of the drop in oil demand: “Global oil demand may decline for the first time in 15 years in 2008 and stagnate next year, the Centre for Global Energy Studies said in a report on Oct. 20.”

As we’ve said before on the Zone, Americans are facing significant financial hardship in the coming months. As global demand for oil continues to sink, however, Americans can take solace in dropping crude oil prices that bring lower heating oil prices along with them.