Oil prices tumbled below 66 U.S. dollars a barrel Wednesday as investors shifted their concern again to a gloomy global economic outlook and its potential impact on energy demand.
On the New York Mercantile Exchange, light sweet crude for December delivery dropped 5.23 dollars a barrel to close at 65.30 dollars.
In London, Brent North Sea crude for December fell 4.57 dollars to settle at 61.87 dollars on the InterContinental Exchange.
The dip reversed Tuesday's upward tendency in prices, buoyed by reported cuts in crude exports by Saudi Arabia and other OPEC members as well as the optimistic sentiment ahead of the U.S. presidential election result.
Price dive
The weekly average oil prices of the Organization of Petroleum Exporting Countries (OPEC), which produces 40 percent of the world's oil, dropped to 57.68 U.S. dollars per barrel last week, the Vienna-based cartel said Monday.
It is the first time that weekly prices have dipped below 60 since the end of March 2007.
Partly triggered by the global financial crisis, oil prices have more than half halved from their July peak of around 147 dollars. In October alone, crude prices tumbled 32 percent.
Energy analysts said the steepness of the fall was due in part to heightened concerns over weakening demand stemming from economic recession and a resurgent U.S. dollar.
Squeezed under mounting pressure, OPEC ministers agreed at an emergency meeting on Oct. 24 to reduce output by 1.5 million barrels per day to 27.3 million from Nov. 1, in an attempt to stem the slide.
OPEC members have been divided over the output cut as each member has its own target price. British Prime Minister Gordon Brown described the cut as "wrong for the world economy," saying it was "absolutely scandalous" amid a global economic crisis.
However, as the decision failed to live up to people's expectations, observers believe that OPEC may launch another round of output cuts to salvage the market.
Venezuela's Oil Minister Rafael Ramirez has proposed an additional production cut of 1 million barrels from OPEC's oil supply in December or before.
Continued drop feared
It will be hard for analysts to figure out exactly what is happening in the oil market as the crude prices showed a trace of volatility this week.
Credit Suisse Group, a financial services company headquartered Zurich, Switzerland, has forecast the biggest drop in global oil demand since 1982 after trimming its estimates for 2009 Chinese oil demand growth from 4 percent to zero.
Last month, oil demand in the United States, the world's biggest oil consumer, fell to its lowest level in more than five years, at 18.6 million barrels a day, according to the Department of Energy.
A growing number of independent experts said they believe that global oil consumption may fall this year, for the first time since 1993.
Oil consumption in developed countries has declined over the past three years, and the growth in energy demand from developing nations also showed signs of slowing down.
Analysts said that a further fall in oil prices cannot be ruled out and it was difficult to define where the bottom line would be.
The last time oil prices fell below 50 dollars a barrel was at the end of 2006, prompting the Saudis and others to engineer two deep production cuts, totaling 1.7 million barrels a day.
Nobuo Tanaka, the executive director of the International Energy Agency, warned Monday that a cut in production could harm consumers and delay an economic recovery.
Economists feared that the real danger is that a big output cut would send prices soaring again, putting the global economy at even greater risk.
As the global economy continues to weaken, OPEC faces a tough time propping up prices, they added.
The 13-member cartel earned 730 billion U.S. dollars from oil and gas exports last year, up 12 percent from the previous year, according to OPEC statistics.
(Xinhua News Agency November 6, 2008)
