Brent oil dips down under $60 in Asia
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After the oil barrel price settled just above 60 dollars in London, morning trading in Asia on Tuesday saw Brent crude oil drop below the 60 dollar mark, as a result of slowing economies and weakening energy demand forecasts.
Brent crude oil dropped below 60 dollars a barrel Tuesday amid concerns over weakening energy demand after data showed US and European economies facing a worsening economic outlook, dealers said.
In morning Asian trade, Brent North Sea crude for December delivery was down 71 cents to 59.77 dollars a barrel. It had tumbled 4.84 dollars to settle at 60.48 dollars per barrel in London on Monday.
New York's main contract, light sweet crude for December delivery, declined 55 cents to 63.36 dollars a barrel, after dropping 3.90 dollars a barrel in US trade.
The European Commission warned on Monday that the worst financial crisis for generations has driven the EU economy into recession and economic growth will come close to a standstill in 2009.
The 15 countries sharing the euro have slumped into the first technical recession, defined by economists as two or more quarters running of economic contraction, since the bloc was formed in 1999, the commission estimated.
In the United States, the world's largest energy consumer, manufacturing activity in October fell to its lowest level in 26 years, according to data from the Institute for Supply Management (ISM) on Monday.
"The further collapse in the ISM manufacturing index to a 26-year low... confirmed that the US economy is now in a severe recession that will be one of the worst in the post-war era," research house Capital Economics said.
This is the steepest fall for the manufacturing index since a recession in 1982 in which the US economy shrank by a total of nearly 3.0 percent, it added.
Capital Economics said a sharp decline in new export orders suggests that much of the decline in demand for US-made goods is coming from overseas, where economies are also hurting from the financial turmoil that originated in the United States.
"The strength of US exports in recent years, particularly from within the factory sector, has been one of the few bits of good news, helping offset the domestic impact of the housing downturn," it said.
"However, this is clearly the next shoe to drop and we suspect that exports will fall sharply in 2009 as many of the world's other economies slide into recession and the dollar continues to strengthen."
A strong dollar makes US-made goods more expensive in the international market.
Oil prices have slumped since striking record highs above 147 dollars per barrel in July, sparking a large production cut from the OPEC oil producers' cartel last month.
But OPEC's decision to slash crude output by 1.5 million barrels a day from November 1 will not immediately shore up crude prices, the cartel's current chief said Sunday.
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