Oil price dives under $60 per barrel

29 minutes ago
LONDON (AFP) — Oil prices sank beneath 60 dollars a barrel in London on Monday, hitting a 17-month low point on worries that a global recession would sap energy demand, and as the US currency strengthened against the euro.

In early trading, Brent North Sea crude for December delivery dropped to 59.02 dollars per barrel, the lowest point since February 2007. The contract later stood at 62.28, down 1.87 dollars from Friday's close.

New York's main contract, light sweet crude for December delivery, tumbled to 61.30 dollars a barrel, which was last seen in May 2007. Later Monday it traded at 60.25, down 1.80 dollars.
The market extended last week's heavy losses to plunge underneath the psychological barrier of 60 dollars per barrel in London for the first time since March 2007.

"Crude prices have continued to slide, as global recessionary concerns intensified after dramatic falls in Asian financial markets which saw Tokyo's Nikkei index fall to its lowest levels since 1982," said Sucden analyst Nimit Khamar.

"Oil prices fell below 60 dollars a barrel to a 17-month low as market participants fear oil demand will suffer amid a global recession.

"Prices are more or less tracking the movements of global equity markets at the moment, as market participants view the indices as gauge for economic conditions and hence an indicator for future oil demand."

Recession fears sent world stocks tumbling Monday, with Tokyo at a 26-year low, Hong Kong down 12 percent and Europe nursing heavy losses despite a G7 pledge to stabilise the financial system.

Japan's Nikkei index plunged 6.36 percent, striking the lowest level since October 1982, on fears that emergency steps by world governments will be too late to prevent a worldwide recession.
The fresh equities turmoil came despite a pledge by the Group of Seven major economies to cooperate to bring stability to the global financial markets.

Crude prices have slumped since striking record high points above 147 dollars per barrel in July.
The Organization of the Petroleum Exporting Countries (OPEC), in a bid to shore up falling prices, announced Friday its output will be cut by 1.5 million barrels per day to 27.3 million barrels starting in November.

However, the market has continued to fall, with OPEC's decision to cut supply at a time of global financial turmoil seen as hurting already weak energy demand, dealers said.

The market has also been weighed down by the strengthening greenback, which makes dollar-priced crude more expensive for buyers holding weaker currencies and therefore tends to dampen demand.

The euro sank under 1.24 dollars in early London trading on Monday, hitting the lowest point for more than two years on fears of recession and the withdrawal of funds into the dollar, dealers said.

The European single currency touched 1.2334 dollars, the lowest point since April 26, 2006, owing to fears of recession and the withdrawal of funds into the dollar, dealers said.

Analysts warned that oil prices could fall even lower if the greenback continues to strengthen.
"Further downward pressure may come from a strong dollar and further falls in equity markets," said analysts at energy consultancy John Hall Associates.