Oil prices fell below $59 a barrel on Tuesday before settling at $59.33, the lowest level since March 2007. Oil also slipped in Europe, with London Brent crude settling at $55.71 a barrel, a drop of $3.37.
Slumping demand has knocked crude off record highs of over $147 a barrel in July as big consumer nations felt the squeeze of the global credit crunch.
Economists slashed oil demand expectations due to the economic slowdown in top consumer the
"Crude prices were slammed into a new low ground again today on the impact of another financial 'double whammy' in the form of a renewed drop in the Dow and sizable increase in the value of the U.S. dollar against the euro," said Jim Ritterbusch, president of Ritterbusch & Associates.
The U.S. dollar rallied against a basket of currencies on Tuesday as global economic worries prompted investors to shun riskier assets and flock to the safety of the greenback. A firmer dollar makes oil more expensive for holders of other currencies and tends to pressure the crude price lower.
Oil prices jumped 2 percent on Monday after
"I think people got a little carried away yesterday with the Chinese fiscal package and the impact it may have on oil prices and after a morning rally reality set in," said Robert Laughlin at MF Global in a research note on Tuesday.
An OPEC source said the cartel may cut oil output by a further 1 million barrels per day when it meets next month in
OPEC agreed last month to cut production by 1.5 million bpd from Nov. 1 after the sharp fall in oil prices.
Distillate stocks should rise by 500,000 barrels and gasoline by 800,000 barrels, according to the poll. The data will be released on Thursday this week, a day later than usual due to Tuesday's U.S. Veterans Day holiday.
Date created : 2008-11-11