Crude oil fell Tuesday on wide-spread feeling that slowdown in global economic growth in 2005 may affect the global demand for oil.

 

Crude oil futures for January delivery traded at $48.50 a barrel in morning trading on the NYMEX after hitting $49.55, the highest number since November 8.

 

Prices fell on expectations of growth in crude and distillate supplies as refineries are now working at full capacity after the completion of autumn maintenance work. Distillate fuel stocks, a category including heating oil, diesel and jet fuel, rose 350,000 barrels from 114.6 million barrels, and crude oil supplies are up 700,000 barrels from 292.3 million last week.

 

Markets remain unstable as the world oil supply is on a tight rope due to the minuscule excess capacity that stays at 1% of the global daily consumption of 82.4 million barrels. Monday disruption occurred on an oil pipeline in Basrah in southern Iraq causing a sharp drop in production. 

 

Legal proceedings in Yukos tax evasion scandal also trickle into oil prices. The Russian government recently announced the intention to sell a majority stake in the main oil-producing facility of the embattled oil giant, Yuganskneftegaz, to cover the $23billion tax bill.