Financial crisis continues to fuel concerns that demand for fuels will be crimped, OPEC considers supply cut.
Oil prices retreated below $90 a barrel on Wednesday as concerns the global financial crisis will crimp demand for fuels overshadowed signs that producer group OPEC was considering a supply cut.
The worst financial crisis since the Great Depression has heightened gloom about the global economy and weakened the outlook for oil demand, sending prices spiralling down nearly $60 since July.
US light crude for November delivery fell 71 cents to $89.35 a barrel by 5.36am (Dubai time) after a more than $2 rise in the previous session. On Monday it hit an eight-month low.
London Brent crude fell 51 cents to $84.15 a barrel.
Underlining the impact of the financial crisis on fuel use, the US Energy Information Administration cut its oil demand growth outlook for next year by 15 percent from a forecast made last month, blaming the "deteriorating" global economy.
"I see the market falling to $86 in the next several weeks," said Anthony Nunan, a risk management executive at Tokyo-based Mitsubishi Corp. "We need some stabilisation in the stock market or an OPEC cut or both."
Signs that members of the Organization of the Petroleum Exporting Countries (OPEC) are becoming uneasy following oil's recent sharp price drop failed to hold up prices on Wednesday, following a $2 a barrel rise in the previous session.
"If this volatility continues, OPEC will have to do something," Shokri Ghanem, chairman of Libya's National Oil Corp, told Reuters on Tuesday.
Libya joined fellow OPEC members Iran and Iraq in expressing concern this week about the impact of the crisis on oil demand.
OPEC, which pumps two in every five barrels of oil, next meets in Algeria in December.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Falling price of oil is good for the world economy. Very high oil prices of the last 9 months are mainly responsible for many companies going bankrupt or struggling to continue operations. High prices also fuel inflation. Oil prices around or below $90 US is a good thing given the troubled world economy and could help the financial markets recover if consumer confidence returns globally. OPEC should look at the "big picture" and focus on what the world needs right now. The world needs to keep people buying and spending money to sustain economies. High oil prices out of greed for more revenue slows everything down. We are on the verge of a DEPRESSION globally and OPEC should take the high road in helping fixing the situation by allowing the price of oil to lower. Oil producers are still making plenty of money as it is.