LONDON: Oil prices plunged to the lowest points for 17 months on Friday, as recession fears sparked renewed demand concerns, despite news that OPEC will cut oil output by 1.5 million barrels per day.
Brent North Sea crude for December delivery slumped to $61.00 per barrel, the lowest point since March 2007.
New York s main contract, light sweet crude for December delivery, tumbled to $62.65 a barrel, which was last seen in May 2007.
Recession fears and uncertainty continue to haunt global markets, while tight credit conditions threaten new energy projects all over the world, which could cause a price spike in the longer run, said Sucden analyst Nimit Khamar.
However, crude futures could benefit from a supply cut by OPEC in the longer run, he added.
The Organization of the Petroleum Exporting Countries said Friday that they would slash output from Nov. 1 in an attempt to stabilize plunging oil prices, despite a looming worldwide recession.
Analysts had expected OPEC to cut its daily output by at least one million barrels per day as a global economic slowdown amid a worsening financial crisis slashes demand for energy.
In later trade on Friday, New York crude was $4.68 lower at $63.16 per barrel and Brent oil slid $3.32 to 62.62.
Crude oil is heading lower again … on fears that the (OPEC) cut might not be sufficient to compensate the shortfall of demand due to a global recession, said Dresdner Kleinwort analyst Peter Fertig.
Global stock markets plunged on Friday, with London losing more than nine percent as it struck a five-year low on news that Britain s economy shrank in the third quarter, placing it perilously close to a recession.
OPEC, which produces 40 percent of world crude, announced a cut to production in a bid to support crude prices which have witnessed a dramatic collapse – unprecedented in speed and magnitude, according to an official statement.
Crude futures in London and New York have plunged by almost 60 percent from record highs of above $147 a barrel reached only three months ago when supply concerns sent prices soaring.
The crude market was also dampened as the dollar strengthened against the euro and pound. A stronger US unit tends to sap demand for dollar-priced crude, which becomes more expensive for buyers holding weaker currencies.
The White House denounced what it called OPEC s anti-market decision to cut production, even though oil prices subsequently slumped on fears of a global recession.
British Prime Minister Gordon Brown was left disappointed by OPEC s output reduction and urged oil producers to show a responsible attitude in the current crisis, his spokesman said.
The cartel s president Chakib Khelil said the production cut would not hurt the global economy. -AFP
