Oil Price recorded biggest drop in a period of 17 years

Ben Bernake, Federal Reserve Chairman, stated that the U.S. economy is facing “significant” risks to growth, while the Organization of Petroleum Exporting Countries lowered its forecast for world oil-demand growth for 2008 and 2009. in apart chances John Kilduff, an analyst at futures brokerage MF Global, said “Signs of economic contraction and financial-market malaise are becoming harder and harder to ignore,”

After rising more than $1 to $146.73, crude futures for August delivery later plunged $9.26, or 6.3%, to an intraday low of $135.92 a barrel on the New York Mercantile Exchange. Futures ended at $138.74 a barrel, down 4.4%, or $6.44, the biggest one-day drop in price for a front-month contract since January, 1991.

Nathan Golz, a commodity researcher at Wachovia Securities, said that “It looks like oil fell to lows we saw at the end of last week and then probably triggered quite a few automatic sell-stops,” in addition to that other commodities also moved lower. August reformulated gasoline tumbled 20 cents, or 5.6%, to $3.38 a gallon, and August heating oil lost 14 cents, or 3.4%, to $3.92 a gallon. August natural-gas futures fell 48.2 cents, or 4%, to $11.48 per million British thermal units.
Corn futures fell for a second day, down more than 2%.

Also on Tuesday, OPEC issued its monthly report, lowering its forecast for world oil-demand growth for 2008 to 1.03 million barrels a day, which represents a decline of 70,000 barrels from its previous estimate. Global oil demand this year is expected to average 86.81 million barrels a day