Crude oil prices hit 17-month lows this week as recession fears sparked renewed demand concerns, despite news that OPEC would cut oil output by 1.5 million barrels per day.
Brent North Sea crude slumped to US$61.00 per barrel, the lowest point since March last year.
New York’s light sweet crude tumbled to US$62.65, which was last seen in May last year.
“Crude oil is heading lower again ... on fears that the [OPEC] cut might not be sufficient to compensate the shortfall of demand due to a global recession,” Dresdner Kleinwort analyst Peter Fertig said.
OPEC said on Friday that it would slash output from Nov. 1 in an attempt to stabilize plunging oil prices, despite a looming worldwide recession.
Analysts had expected OPEC to cut its daily output by at least 1 million barrels per day as a global economic slowdown amid a worsening financial crisis slashes demand for energy.
In later trading on Friday, New York crude was US$4.59 lower at US$63.25 per barrel and Brent oil slid US$4.30 to US$61.62.
Global stock markets plunged on Friday, with London losing more than nine percent as it struck a five-year low on news that Britain’s economy shrank in the third quarter, placing it perilously close to a recession.
OPEC, which produces 40 percent of world crude, announced a cut to production in a bid to support crude prices which “have witnessed a dramatic collapse — unprecedented in speed and magnitude,” an official statement said.
Crude futures in London and New York have plunged close to 60 percent from record highs of above US$147 a barrel reached only three months ago when supply concerns sent prices soaring.
The crude market was also dampened as the dollar strengthened against the euro and pound. A stronger US unit tends to sap demand for dollar-priced commodities like crude oil and gold, which become more expensive for buyers holding weaker currencies.
The White House denounced what it called OPEC’s “anti-market” decision to cut production, even though oil prices subsequently slumped on fears of a global recession.
The cartel’s president Chakib Khelil said the production cut would not hurt the global economy.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in December, had tumbled to US$63.16 per barrel from US$79.96 for the November contract a week earlier.
Brent North Sea crude for December slumped to US$62.62, compared with US$76.56 last week.
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