Oil prices tumbled today as a slide in global stock markets refocused attention on the prospect of widespread recession, which is likely to cut deep into oil demand in many developed economies.
US light, sweet crude for December delivery fell over $4 to $58.32, its lowest since March 2007. London ICE Brent crude fell $3.83 to $55.251.
"The oil market is coming down into line with demand expectations," said Simon Wardell, oil analyst at Global Insight in London. "There's more downside weakness here than upside strength. We are expecting prices to go lower before they go higher with U.S. crude hitting $50 before its reaches $65 again."
Economists are gradually readjusting their expectations for oil demand in the light of the accelerating slowdown in the United States and Europe and some say a contraction in worldwide oil demand is possible next year.
Many analysts are expecting a big drop in consumption in the developed economies next year and most suggest that a further rise in demand in developing economies just about offsets that fall in demand. But some economists are now talking about a fall in global oil demand in 2009.
The recent fall in prices and signs of falling demand are encouraging oil consumers and refiners to keep their stocks low and even get rid of inventory.
Traders said the slide in oil prices began in very early trading as falls in US, Asian and then European stock markets drew investors' attention away from China's $600 billion economic aid package.