Oil prices below US$47
OIL prices sank on Tuesday amid deepening worries about a global slowdown, closing 100 dollars below their record peaks reached less than four months ago, AFP reported.
New York light sweet crude for January dropped 2.32 dollars to close at 46.96 dollars (S$71.9), the first time the benchmark contract has settled below 47 dollars since May 2005.
The contract sank to an intraday low of 46.82 dollars in late trade.
In London, Brent North Sea crude for delivery in January settled at 45.44 dollars a barrel, down 2.53 dollars from Monday's close. It had hit an intraday low of 45.30 dollars.
Oil prices have plummeted amid the global financial crisis from record highs hit on July 11: 147.27 dollars in New York contract and 147.50 dollars in London.
'There is still a fear that the global economy is in deep trouble and the oil price is simply following that,' said Mr Adam Sieminski, analyst at Deutsche Bank.
Oil prices fell more than five dollars on Monday after OPEC decided at a weekend meeting in Cairo against cutting production, preferring to wait until December before reducing crude exports.
The cartel's secretary general Abdalla Salem El-Badri said on Monday that Opec would decide on a 'major' output cut next month if the oil market were deemed to be deteriorating.
'The fear is that if Opec doesn't take further action very soon and the economy continues to deteriorate, that there's nothing to stop the price from shrinking every day,' Deutsche Bank's Sieminski said.
Dresdner Kleinwort analyst Peter Fertig said that 'Opec's attempt to talk prices up by announcing a production cut for the regular summit on December 17 in Algeria and by stating that 75 dollars a barrel would be a fair price, has failed miserably.'
Opec president Chakib Khelil said on Tuesday that the level of global oil inventories should be reduced by four days to stabilise the price of crude.
Khelil, who is Algeria's energy minister, said the forward demand cover for oil should be lowered progressively from 56 days to 52 days, the average over the past five years.
'It's impossible to do this in three months. Maybe in six months,' he was quoted as saying by the APS news agency.
Mr Khelil said the Organisation of the Petroleum Exporting Countries, which pumps 40 per cent of the world's crude, should take into account the drop in global demand for oil and growth forecasts for its main consumers: the United States and China.
'If they expect to have any chance of halting the current price slide and reaching their goal of maintaining anywhere near a 75-dollar price level, a clear demonstration of unity is necessary,' said Mr John Kilduff at MF Global.
'They must take more oil off world markets. Stockpiles are clearly at very high levels,' he added.
Opec has already slashed output twice this year, in September and October, by a total of two million barrels per day (bpd) in response to plunging prices.