Crude oil lost nearly 6 percent and closed below US$40 a barrel on Monday on signs that a deepening recession is deteriorating fuel demand.
Light, sweet crude for February delivery fell US$2.45 to settle at US$39.91 a barrel on the New York Mercantile Exchange. February contract's slide came after a 1.7-percent rally on Friday. The January contract, which expired last Friday, closed at US$33.87 a barrel after dropping to as low as US$32.40 a barrel, level last seen in February 2004.
Economic slowdown continues to weigh on the investors, as negative corporate profit reports sent U.S. stocks sliding on Monday. Toyota Motor Corp. projected its first-ever operating loss since 1938 and the world's largest maker of mining and construction equipment Caterpillar Inc. decided to cut executive pay by up to 50 percent in 2009 due to weakening demand.
A record production deduction by OPEC last week seems inadequate to lift the market sentiment. Many analysts believe that the dealers remain skeptical on the oil cartel's compliance in the supply cut. OPEC President Chakib Khelil told press on Sunday that OPEC was willing to further cut production as much as was necessary to stabilize oil prices.
Oil prices are 72 percent down from the July high of US$147.27 a barrel as a global economic slowdown slashed world energy demand.
In London, Brent crude for February delivery fell US$2.55 to settle at US$41.55 a barrel on the ICE Futures Exchange.
(Xinhua News Agency December 23, 2008)
