Brent North Sea crude sank below the 80-dollar mark for the first time in about a year, before the International Energy Agency (IEA) warned that an approaching recession and cash crisis are cutting deeply into demand for oil.
Dealers said economic fears outweighed news that the Organization of the Petroleum Exporting Countries (OPEC) will hold an emergency meeting next month to discuss the global crisis and its impact on energy demand.
Brent North Sea crude for November delivery fell $4.78 to $77.88 after settling $1.70 lower at $82.66 on Thursday in
"In stock markets around the region we are really having a bloodbath and, correspondingly, oil spirals (down) along with it," said Victor Shum, of international energy consultancy Purvin and Gertz in
In its monthly report on global oil trends, the IEA said falling demand "in the face of higher prices is now being perpetuated by weakening economic prospects."
The IEA, energy policy adviser to major industrialized countries, cut its forecast for demand in the 30-nation OECD area this year by about 360,000 barrels per day.
The revision leaves demand this year at 48.1 million barrels per day in the members of the Organization for Economic Cooperation and Development, which includes the
It also downgraded its forecast for OECD demand next year by about 360,000 barrels per day to 47.5 million barrels per day.
Shum said the oil market has "a growing sense of inevitability" that the world is entering an extended economic slowdown which would hurt demand for energy.
OPEC said it would hold an emergency meeting in
"The organization is concerned about the deteriorating economic conditions," said a statement from OPEC, whose 12 member nations pump around 40 percent of world oil supplies. OPEC reiterated its determination "to ensure that oil market fundamentals are kept in balance and market stability is maintained."
Some oil analysts said that if prices continue to fall OPEC could slash output. "Market participants are still very much concerned that demand will continue to dwindle as global economies continue to slow sharply," said Sucden analyst Nimit Khamar in
But Shum said a production cut would be very badly received by the international community as the world heads into an economic slump.
"I think the moderate members, in particular the Saudis, will not agree to any form of production cut," Shum said, referring to OPEC’s largest member
Data released in the