Oil prices slumped Friday to one-year lows under $80 per barrel, striking $75 in London, amid a global equities meltdown that sparked fears over demand for energy, traders said.
The International Energy Agency (IEA) also warned that the threat of recession and the ongoing financial crisis would erode oil demand and set back investment in new oilfields.
Brent North Sea crude for November plunged as low as $75.00 — which was last witnessed on Oct. 12, 2007 — as traders responded to renewed heavy falls on world stock markets.
The contract later stood at $76.56 a barrel, down $6.10 from Thursday.
On Friday, New York’s main contract, light sweet crude for delivery in November, plumbed a one-year low of $78.61 a barrel. It later stood at $79.96, down $6.63 from Thursday.
The sharp falls came despite news that OPEC will hold an emergency meeting next month on the impact of the markets crisis — amid speculation that the crude producers’ cartel could cut output to safeguard precious oil revenues.
"The deteriorating outlook for world growth is leading to a violent correction in commodity prices," Deutsche Bank analysts wrote in a research note to clients.
"Further deterioration in the global GDP (gross domestic product) outlook could act as a trigger for lower oil prices," he said, adding that prices could fall to about 60 dollars per barrel.
The price of crude oil has now slumped by almost 50 percent since striking record high points above $147 per barrel on July 11.
Meanwhile, global stock markets suffered another calamitous sell-off on Friday, as the ongoing financial crisis showed no signs of easing up, dealers said.
"Crude prices continued to tumble as fear over the uncertain outlook for energy demand continues to be the dominating factor," said Sucden analyst Nimit Khamar.
"Markets are very much trading on fear, which has overwhelmed (the) fundamentals" of supply and demand, he added.
The 12-nation Organization of Petroleum Exporting Countries (OPEC) announced Thursday that it would hold an emergency meeting in Vienna on Nov. 18 to discuss the effects of the international financial crisis.
British Prime Minister Gordon Brown said on Friday that a cut in output reportedly being discussed by producing nations would be "wrong for the world economy".
"I’m concerned when I hear that the OPEC countries are meeting, or about to meet, to discuss cutting production, in other words making the price potentially higher than it should be," he said.
It would be "wrong for the world economy … for OPEC to cut production and therefore keep prices high," he added.
The cartel’s next regular meeting was scheduled for Dec. 17 in Oran, Algeria.
At its last ordinary meeting on Sept. 9-10, OPEC decided to cut its production of 520,000 barrels of oil per day to sustain oil prices above $100 a barrel. Prices have since plunged dramatically.
In a monthly report published on Friday, the Paris-based IEA said that falling demand "in the face of higher prices is now being perpetuated by weakening economic prospects."
The IEA, energy policy adviser to major industrialized countries, cut its forecast for demand in the 30-nation OECD area this year by about 360,000 barrels per day.
Overall world demand this year would be 86.5 million barrels per day — a reduction of 240,000 barrels from the previous estimate, to show a rise of 0.5 percent from last year.
The world forecast for next year was cut by 440,000 barrels per day to 87.2 million barrels per day, showing an annual increase of 0.8 percent. –AFP
(AFP & Daily Star Egypt)