Singapore: Oil prices fell further below $80 in Asian trade Wednesday amid uncertainty over the future of the global economy, despite an international effort to rescue ailing banks, dealers said.
New York’s main contract, light sweet crude for delivery in November, dropped 53 cents to $78.10 after easing $2.56 to $78.63 on the New York Mercantile Exchange Tuesday.
Brent crude for November delivery fell 23 cents to $74.30 a barrel, adding to a drop of $2.93 to $74.53 Tuesday in London.
Oil prices have plunged from record highs above $147, reached in July, because of worries over demand in a slowing global economy, dealers said.
Those worries persist despite government efforts this week to intervene in the world’s banking sector, analysts said.
European governments unveiled rescue packages totalling more than one trillion dollars for troubled financial institutions. On Tuesday US authorities followed with a government infusion of up to $250 billion into struggling banks and new guarantees to help restore credit flows.
“It should take time to sort out everything,” said Tetsu Emori, a fund manager at Astmax asset management in Tokyo. “The situation is quite uncertain.”
While money markets may regain a semblance of normality, “the larger economy which it services is still heading towards, if not already in, recession,” said analysts at MF Global.
“Demand has suffered and will continue to suffer.”
The head of the San Francisco branch of the US Federal Reserve, the central bank, said late Tuesday that the United States has entered a recession.
Traders are waiting for the next move by the Organisation of the Petroleum Exporting Countries (OPEC) cartel, which is to hold an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.
Emori said the cartel could decide to cut production if the price falls to around $70.
Iran on Sunday predicted that OPEC would cut oil output at its November session. Libya also appealed last week for lower production should crude