Oil fell over $1 to below $56 a barrel this morning, dropping to near its lowest in almost two years after a meeting of the Group of 20 major economies ended with few actual proposals on how they would combat a global recession.
News that the Organization of the Petroleum Exporting Countries (OPEC) may wait until its meeting on December 17th, instead of the end of November, to make a decision on whether to cut production targets again, also weighed on prices.
US light crude for December delivery fell $1.28 to $55.76 a barrel by 1.09am, after having fallen earlier to $55.60, just off the $54.67 a barrel low it hit on Thursday, its weakest since January 2007.
London Brent crude fell 85 cents to $53.39.
"G20 leaders may have urged fast action to deal with the global financial crisis, but concern over the weakened international economic outlook still weighs heavily," said David Moore, a commodities strategist at the Commonwealth Bank of Australia.
Governments from Washington to Beijing agreed on Saturday to a raft of fiscal and monetary steps to rescue the global economy but it was left to individual governments to tailor their responses to their particular circumstances and troubled industries.
Although the package of economic rescue measures agreed by the G20 countries sought to settle volatile markets and calm consumer anxieties about leaders' ability to work together, the proposals did little to alleviate investors' fears.
Today, US stock index futures slipped, while the yen and the US dollar rose as investors turned more risk adverse on assessments that the meeting yielded no concrete moves to prevent the world from sliding into a deep recession.
The worst financial crisis in 70 years has pushed a growing number of countries into recession, heightening fears of a sharp slowdown in near-term world energy demand and accelerating oil's tumble from its July peak of over $147.
Japan, the world's second-biggest economy, shrank 0.1 per cent in the third quarter, marking its first recession for the first time in seven years and following other industrialised economies - including Italy, Germany, Hong Kong and Singapore - into recession as exports were hit by weakening global demand.
Oil fell over 2 per cent on Friday after news of a euro zone recession and data showing a record decline in US retail sales stirred concerns of a further drop in fuel demand.
Reuters