LONDON // Oil dropped almost $3 a barrel to a fresh seven-week low today, extending a decline that has knocked more than $20 off prices in two weeks. Concern high prices and the slowing US economy will undermine demand have helped oil fall from a record $147.27 on July 11. Technical trading and a short-covering bounce had buoyed prices earlier. "Potentially, there are some people selling off after a weak bounce," said Harry Tchilinguirian, an oil analyst at BNP Paribas.
US crude was $2.64 lower at $122.85 a barrel by 1421 GMT and traded as low as $122.50, the lowest since June 5. Brent crude lost $2.72 to $123.72. Some analysts said oil could be headed lower still. Jim Ritterbusch, president of Ritterbusch & Associates, said crude could drop to as low as $117 within about a week, while Barclays Capital said it expected trading within a $115 to $140 range during the quarter.
Even so, concern about oil supplies, particularly a threat this week from rebels in Nigeria to attack oil installations, was expected to give oil some support. Earlier this month the International Monetary Fund slightly revised up growth forecasts in 2008 for emerging and developing economies, home to most if not all of the current growth in world oil demand.
"Nothing in the fundamental drivers has changed supply constraints are still with us, and the latest IMF views confirm emerging market economic growth," Mr Tchilinguirian said. Even after the recent price fall, oil has risen by almost 30 per cent in 2008 and is up from below $20 in early 2002 due to rising demand from fast-growing economies such as China. Oil's rally, which the Opec exporter group has blamed on factors beyond supply and demand, has led to pressure on politicians to take action to help consumers paying higher fuel prices.