US oil prices drifted below $50 a barrel today, extending a week-long slump that has shaved more than $5 off record-high prices as some traders cashed in profits ahead of the US presidential election.
Rising US crude oil inventories and production, signs of slowing economic growth and speculation that a victory by Democrat challenger Senator John Kerry could prove bearish for oil prices all contributed to a wave of profit-taking.
US light, sweet crude oil was trading 18 cents lower at $49.95 a barrel, having dropped $1.63 yesterday, when prices dipped below $50 for the first time in a month.
Short-term forecasts for warmer-than-usual weather in the eastern United States also encouraged some selling, traders said, as it would give refiners more time to top up very low heating oil inventories before demand peaks with the onset of winter.
Some energy analysts say a win for Senator Kerry in today's US presidential election could mean lower crude prices than if President George W. Bush were reelected. Latest opinion polls can barely separate the two.
"Kerry is bearish in a number of ways," said Mr David Thurtell at Commonwealth Bank of Australia in Sydney. Mr Kerry says he would halt plans to fill the US strategic petroleum reserve (SPR) at high prices to keep more crude on the market, providing a bit more slack for tight global supplies.
The Massachusetts senator is also seen more likely to push energy conservation measures and alternative fuel sources, curbing demand from the world's biggest consumer, which accounts for nearly one in four barrels used worldwide.
Some analysts say a Bush win could stoke nervousness about US policies in the oil-producing Middle East, while Mr Kerry is seen as more likely to work through diplomatic channels.
Prices have also been hit by signs of slowing growth or disappointing economic indicators in the US , China and Europe, giving speculators an excuse to tuck away profits from a nearly unbroken $13 rally since September.
Global manufacturing growth slowed in October due to high prices, leading indices show, while US third-quarter gross domestic product expanded by less than expected.
China, which this year became the world's second-largest energy consumer, is expected to see economic growth slow to 8.5 per cent next year after expanding at 9.3 per cent in 2004.
Potential disruptions in OPEC nations served a reminder that the global supply system - already running nearly full-throttle to keep up with galloping demand - had little scope to compensate any unexpected outages.
Saboteurs blew up an oil pipeline in northern Iraq yesterday, although it was not clear whether exports were affected, while Nigerian unions have planned a general strike for November 16th.