Oil prices dropped 10 per cent and touched 13-month lows in a flight from risk amid concerns of a worldwide recession and further signs of slumping energy demand. In New York, the price of crude plunged below 80 dollars.
Oil prices sank below 80 dollars per barrel this week as commodities were knocked by plunging world stock markets, but gold benefited from its status as a safe bet in times of economic turmoil.
"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.
However, precious metals were a bright spot, as investors sought to shelter their cash from tumbling equities.
OIL: Crude oil prices slumped to one-year lows on Friday, striking 75 dollars 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 oil plunged as low as 75.00 dollars -- which was last witnessed on October 12, 2007 -- as traders responded to renewed heavy falls on world stock markets.
New York's light sweet crude plumbed a one-year low of 78.61 dollars a barrel.
Over the course of the week, prices shed about 14 dollars in value.
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 price of oil has now slumped by almost 50 percent since striking record high points above 147 dollars per barrel on July 11.
Meanwhile, global stock markets suffered a calamitous sell-off this week, as the ongoing financial crisis showed no signs of abating, 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.
The 12-nation Organization of Petroleum Exporting Countries (OPEC) announced Thursday that it would hold an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.
At its last ordinary meeting on September 9-10, OPEC decided to cut its production of 520,000 barrels of oil per day to sustain oil prices above 100 dollars a barrel. Prices have since plunged dramatically.
In a monthly report, 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 industrialised 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.
By Friday, New York's main oil futures contract, light sweet crude for delivery in November, had tumbled to 79.96 dollars per barrel from 94.33 dollars a week earlier.
Brent North Sea crude for November slumped to 76.56 dollars from 90.93 dollars.
Date created : 2008-10-10