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Oil drops to 22 month low of $55 driven by recession fears

Oil fell for a third straight day on Thursday to hit a 22-month low of $55 a barrel as mounting pessimism about the global economy outweighed OPEC's comments that it could cut output again as early as end-November.

  • Agencies
  • Published: 07:47 November 13, 2008
  • Gulf News

  • Image Credit: Supplied photo

Perth: Oil fell for a third straight day on Thursday to hit a 22-month low of $55 a barrel as mounting pessimism about the global economy outweighed OPEC's comments that it could cut output again as early as end-November.

OPEC officials, concerned about oil's steep drop from record highs over $147 a barrel per day (bpd) in July, said the cartel could possibly decide by the end of the month to cut production again to raise prices.

But comments from the producer group failed to lift oil prices, as investors focused on near-term demand worries after the US Energy Information Administration (EIA) slashed America's 2008 oil demand outlook and the International Energy Agency (IEA) flagged further reduction in its oil forecast.

US light crude for December delivery was down 81 cents at $55.35 a barrel by 0259 GMT, after having fallen earlier to $55.03 the lowest since January 29, 2007.

London Brent crude fell 41 cents to $51.96 in early Asian trade.

"Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption," said David Moore, an analyst at the Commonwealth Bank of Australia.

Oil fell 5 percent overnight, along with a big drop in US stock markets, after the US government shifted its position on how it planned to use its $700 billion bailout fund, which added uncertainty to financial markets and renewed fears of a protracted global recession.

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