SINGAPORE (AP) — Oil prices slid to near $55 a barrel Thursday in Asia as more bad economic news from the U.S. heightened fears of a severe global downturn that will pulverise demand for crude. Light, sweet crude for December delivery was down 81 cents to $55.35 a barrel, after falling as low as $55.03, in electronic trading on the New York Mercantile Exchange by midmorning in Singapore."There are fears of reduced demand through 2009," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "Market sentiment is extremely bearish. It seems like there's nothing that can stop the bears."
The crude futures contract overnight fell $3.50 to settle at $56.16, the lowest closing price since January 2007, after the U.S. Energy Department slashed its 2009 oil consumption forecast. The department said Wednesday it expects U.S. consumption of petroleum to next year drop more severely than any time since 1980. The department's Energy Information Administration said 2009 petroleum consumption is projected to sink by 250,000 barrels per day, or 1.3 percent, more than twice that projected in its previous outlook.
The Organization of Petroleum Exporting Countries, which produces about 40 percent of world supplies, has signaled it may cut production before its next meeting in December on top of a 1.5 million barrel reduction in output quotas last month. "I think OPEC considers $50 a must-defend price," Shum said. "There are bullish elements that the market has been ignoring."
In other Nymex trading, heating oil futures fell 1.39 cents to $1.82 a gallon, while gasoline prices dropped 0.3 cents to $1.24 a gallon. Natural gas for December delivery slid 8.6 cents to $6.32 per 1,000 cubic feet. In London, December Brent crude fell 41 cents to $51.96 a barrel on the ICE Futures exchange.