A sharp fall in oil prices has prompted Organization of Petroleum Exporting Countries to bring forward a meeting on the impact of the financial crisis. With a barrel of Brent crude down more than 50pc on its July peak of $147, the oil cartel said it would now meet on October 24.

Last week the Organization of Petroleum Exporting Countries said it was going to meet on November 18 “to discuss the global financial crisis, the world economic situation and the impacts on the oil market”.

Oil has followed movements in equity markets this month and with share prices down sharply worldwide, the price of a barrel of Brent crude in London was trading down $4.60 at $66.20 in afternoon trading - a 15-month low.

“Following consultations with the president of the OPEC Conference and colleague ministers, it has been decided to re-schedule the extraordinary meeting of the OPEC Conference,” the cartel said in a statement, citing a decision by Organization of Petroleum Exporting Countries Secretary General Abdalla Salem El-Badri.

“The Organization is concerned about the deteriorating economic conditions,” it said in a statement.

“The subprime mortgage problems that have been observed for a long time have created a shock wave in financial institutions resulting in huge losses, and an escalating credit squeeze which has turned into a deep financial crisis.”

Tightening credit has eroded demand and pushed prices down 18pc from a year ago, and 51pc from the record $147.27 a barrel reached on July 11. Organization of Petroleum Exporting Countries yesterday cut its forecast for demand next year by 450,000 barrels a day, or 0.5 pc, to 87.2m barrels a day because of “dramatically worsening” financial market conditions.

“Demand not just for energy but across all consumer products is going to be hit,” said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore.

“That’s just going to export recession to Asia and the manufacturing economies. Next year is not going to be pretty.”

Federal Reserve chairman Ben Bernanke said yesterday that efforts to calm financial markets will probably not result in an immediate economic rebound.

Fears that the world was heading for an economic slowdown saw oil prices fall to their lowest level for nearly 14 months, impacting on several areas of consumer spending and raising hopes that consumer price inflation, which hit a 16-year high in September at 5.2 per cent, may be about to decline.

One upside to the drop in oil to a 14-month low has been a cut in petrol prices. Yesterday oil company BP and supermarket chains Asda and WM Morrison cut the price of unleaded petrol to 99.9p a litre.

Source: Telegraph

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Energy stocks reversed course and moved lower Monday as traders eyed the negative impact of hurricanes Ike and Gustav along with flat crude oil prices. The two storms will take a bite out of third-quarter profit for the component companies making up the Philadelphia Oil Service Index ($OSX: $OSX 261.32, -4.77, -1.8%) , Dan Pickering of Tudor Pickering Holt said in a note to clients.

“Two hurricanes back-to-back keeps Gulf of Mexico (drilling) activity muted for two weeks, perhaps three,” he said. “Remember, the Gulf of Mexico (is) generally a high-margin business with high fixed costs.”

Oil for October delivery edged up 11 cents to $106.34 a barrel. Hurricane Ike churned over Cuba on Monday, weakening to a Category 2 storm as it made landfall. Forecasters predict the storm will move into the Gulf of Mexico and hit somewhere between Texas and Alabama by this weekend. See Futures Movers.

Traders are also focusing on the Organization of Petroleum Exporting Countries meeting scheduled Tuesday in Vienna. The oil cartel’s widely expected to keep its production unchanged. The Amex Oil Index (XOI: 1,219.74, -2.47, -0.2%) fell 0.2% to 1,220, after rising a as much as 2% earlier in the day. The Philadelphia Oil Service Index ($OSX: 261.32, -4.77, -1.8%) dropped 1.8% to 261. The Amex Natural Gas Index (XNG: 550.96, -10.57, -1.9%) subtracted 1.9% to 551.

Among energy stocks in the spotlight, ConocoPhillips (COP: 74.69, -0.74, -1.0%) agreed to pay up to $8 billion for a 50% stake in coal seam assets of Australia’s Origin Energy Ltd., including a $5 billion upfront payment. See full story.
Shares of ConocoPhillips dropped 74 cents to $74.69.

Dan Pickering said every major oil-service player will see some impact from the hurricanes, but Smith International (SII: 63.67, +0.15, +0.2%) , Superior Energy Services (SPN: 37.80, -1.08, -2.8%) , Hercules Offshore (HERO: 18.11, -0.95, -5.0%) and Oceaneering International (OII: 54.23, -1.21, -2.2%) may have the most exposure. Among the group, Oceaneering fell 2.2% to $54.23.

Meanwhile, Transocean (RIG: 120.42, -1.85, -1.5%) was upgraded to hold from sell by Deutsche Bank, as the broker sees “more realistic” expectations embedded in the stock. “Additionally we believe RIG’s substantial backlog and visibility on cash flow provide some defensive qualities in the current challenging market environment,” the broker said.

Transocean’s shares fell 1.5% to $120.42.
Baker Hughes (BHI: 69.78, -2.71, -3.7%) said rig counts worldwide rose 87 to 3,523 in August, with the number of rigs in operation in the U.S. rose 55 to 1,987. The provider of oilfield services counts the number of drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and international markets.

Shares of Baker Hughes fell 3.7% to $69.78.
Overseas, Royal Dutch Shell’s natural gas plan for Iraq has received provisional clearance from the Iraqi government, opening up the chance for Shell to invest $3 bllion to $4 billion to gather 500 million to 600 million cubic feet a day of associated natural gas in Iraq currently going to waste, Global Insight noted. U.S.-listed shares of Royal Dutch Shell (RDSA: 62.05, -0.52, -0.8%) fell 52 cents to $62.05.

Source: MarketWatch| By Steve Gelsi