The price of oil on Wall Street went down to $54.13, its lowest level since January 2007, as part of a wider market downturn due to concerns about global economic weakness.
Oil prices fell on Tuesday as part of a wider market downturn due to concerns about global economic weakness.
Uncertainty about the fate of talks over aid for General Motors Corp and other U.S. automobile makers fueled worries that helped send U.S. stocks lower. nN18272083.
U.S. crude traded down 23 cents to $54.72 a barrel by 13:53 p.m. EST (1853 GMT), after dropping as low as $54.13, the lowest level since January 2007.
London Brent crude traded down 23 cents at $52.08 a barrel.
"Crude oil futures moved down with Wall Street. ... Market fundamentals are very tenuous," said Andy Lebow, broker at MF Global.
"The oil market is in a major downtrend and moving down with equities confirms there is a lack of confidence in what brought prices up earlier."
Oil prices have dropped from record highs above $147 a barrel in July as the mounting economic crisis has clipped fuel demand in big consumer nations such as the United States.
The AAA motor group on Tuesday forecast U.S. travel for the upcoming Thanksgiving holiday next week would decline for the first time since 2002.
The steep drop in prices has prompted some members of the Organization of Petroleum Exporting Countries to call for more production cuts, after the cartel agreed to remove about 2 million barrels per day from world markets since September.
Traditional price hawk Iran has sought another 1 million to 1.5 million bpd in cuts and has called for talks with non-OPEC members on supply curbs.
"Iran is stating that OPEC will reach out to non-OPEC producers on supply coordination. OPEC will likely find a willing partner in Russia, and we have witnessed cooperation by Mexico and Norway in years past," John Kilduff, senior vice president at MF Global, said in a research note.
Russia, the leading non-OPEC producer, sent a high level delegation to observe OPEC's September meeting in Vienna and the group's secretary-general visited Moscow in October.
However, Russia's output is stagnating regardless of any decision to curb production, while Mexico is facing output declines, and historically non-OPEC cooperation with OPEC cuts has been unconvincing.
OPEC ministers will gather in Cairo on Nov. 29 to discuss falling oil prices, but it has yet to be confirmed the meeting will be turned into a full-scale session. The group's next scheduled meeting is on Dec. 17 in Algeria.
A Reuters poll of analysts ahead of weekly U.S. inventory data due Wednesday forecast a 900,000-barrel build in crude stocks, a 300,000-barrel rise in distillate stocks and a 900,000-barrel increase in gasoline inventories.
Date created : 2008-11-18