Fears for US recession as oil price reaches 20-month low
The price of oil fell to $59.32 a barrel in early trading today, the lowest point since February 2007, amid growing concerns that a US recession will reduce demand.
Oil prices reached a high of $147 a barrel in mid-July. Last week, Opec said it would cut its output by 1.5m barrels a day to 27.3m barrels starting this month to shore up oil prices.
Meanwhile, figures from the Institute for Supply Management have revealed that US manufacturing activity fell last month to its lowest level since September 1982.
The figures were much worse than analysts had expected and resulted in the Dow Jones briefly entering negative territory in early morning trading yesterday.
However, there was some slightly good news after US construction spending in September fell less than anticipated. The institute’s index of national factory activity fell to 38.9 from 43.5 in September.
Excluding clothing and electronic products, every sector surveyed, reported a contraction for the month.
Furthermore, October’s car sales figures in the US revealed some gloomy news with sales at General Motors down 45% compared with October last year. Sales at Chrysler fell 35%, while Ford’s fell 30%.
In October, 838,156 vehicles were sold, which was a fall of 32% and the worst figures since for nearly 18 years, according to Autodata.
Mike DiGiovanni of General Motors said the figures represent a severe recession for the US automotive industry.