Oil slides below $50

New York: Crude oil fell below $50 a barrel in New York for the first time in almost two years as a recession in the US, Europe and Japan cut global energy demand.

Oil has dropped nearly $100 from its July record as the world economic crisis reduced global demand growth to its weakest in 23 years. Crude oil's continuing slide will add to concern that the US economy faces deflation, threatening investment in oil and gas production projects.

Crude oil for December delivery fell $3.50, or 6.5 per cent, to $50.12 a barrel at 10:06am on the New York Mercantile Exchange, after falling as low as $49.91. The contract last declined below $50 on January 18, 2007. Futures have dropped 66 per cent since reaching a record $147.27 on July 11.

The December contract expires on Thursday. The more-active January contract dropped $3.32, or 6.1 per cent, to $50.78 a barrel. It fell as low as $50.26 today.

“Prices are plunging down through $50 due to the serious economic slowdown, broad-based deleveraging and risk aversion,'' said Mike Wittner, head of oil market research at Societe Generale SA in London. “Demand growth in developed countries is contracting sharply.''

Brent crude oil for January settlement declined $2.98, or 5.8 per cent, to $48.74 a barrel on London's ICE Futures Europe exchange. Futures touched $48.20, the lowest since May 24, 2005.