London: Oil prices fell on Wednesday to below $58 (Rs2,830) a barrel as expectations of weaker energy demand more than offset news of reductions in supply.

The move extended a fall of 5% on Tuesday when US light crude oil futures closed below $60 for the first time since March 2007.

News that the Organization of the Petroleum Exporting Countries (Opec) may cut supplies by an additional one million barrels per day (mbpd) when it meets in Algeria next month did little to prevent the downward spiral that has knocked 60% off oil’s value from a record high of more than $147 in mid-July.

Zero effect: News that Opec may cut supplies by an additional 1mbpd when it meets next month did little to prevent the downward spiral. Hemant Mishra / Mint

London Brent crude was at $55.38, down 33 cents, at 12.23pm London time.

“It’s bearish news all around. I expect the IEA (International Energy Agency) to further revise down the energy demand forecasts," said Tobias Merath, head of commodities research at Credit Suisse. “Even the new set of industrial production numbers due from China and Japan this week should be having a bearish undertone."

China’s industrial production growth slowed to about 8% in the year to October, the first time it has been in single digits since the end of 2001, an official familiar with the data said earlier this week. The official data is due on Thursday.

The World Bank has slashed its 2009 forecast for developing countries and has offered new financing of more than $100 billion over the next three years to help cope with the financial crisis. It revised downward its growth forecast for developing economies to 4.5% for next year, from 6.4% projected in June, on a combination of financial turmoil, slower exports and weaker commodity prices.

Opec agreed last month to cut production by 1.5 mbpd from 1 November after the sharp fall in oil prices. But Qatar, one of Opec’s smallest members, has told at least two term buyers in Asia that it would not cut its crude oil supplies to them for November and December, people close to the lifters said on Wednesday.

This came even after energy minister Abdullah al-Attiyah told Reuters last week that Qatar had cut crude oil exports to Asia by about 40,000 bpd from this month in line with the Opec agreement.

US weekly inventory data was expected to show an 800,000-barrel rise in crude stocks last week as demand continues to slow, a Reuters poll of analysts found.