Singapore: World oil prices fell further on Tuesday, dragged down by worries that weaker US oil demand could spread to Europe and Japan, analysts said.
New York’s main contract, light sweet crude for September delivery, dropped 48 cents to 112.39 dollars a barrel.
That came on top of a 90-cent drop in New York trade Monday, when the price closed at 112.87 dollars at the end of floor trading.
Brent North Sea crude for October delivery fell 58 cents to 111.36 dollars after settling 61 cents lower at 111.94 dollars a barrel on Monday in London.
“There’s a fear in the oil market right now about some of the pretty dramatic news we’ve seen coming out of the United States spreading into Europe and Japan,” said Dave Ernsberger, Asia director of global energy information provider Platts, in Singapore.
Oil demand in the United States has suffered its biggest fall since 1982, Ernsberger said, describing demand in the world’s largest oil consumer as “a basket case.”
Demand has suffered while the US economy struggles.
World oil prices have fallen heavily from record highs above 147 dollars in early July but are still well above levels of a year ago. Oil broke through 100 dollars for the first time at the start of this year.
“Oil, if you think about it, has got plenty of room to fall,” Ernsberger said.
Japan’s central bank began a two-day meeting Monday at which it was expected to hold interest rates steady in the face of a shrinking economy and the fastest inflation in a decade.
The risk of Japan’s first recession in six years appears to be the Bank of Japan’s biggest concern after Asia’s largest economy contracted by 0.6% in the second quarter of 2008, analysts said.
In Europe, official figures showed the 15-nation eurozone economy contracted for the first time, shrinking by 0.2% in the second quarter.