Oil slump to fresh low on weak economic gloom

Oil slump to fresh low on weak economic gloom

New York: World oil prices tumbled on Wednesday to new four-year lows in volatile pre-Christmas trade as economic gloom weighed on the market, analysts said.

Light sweet crude for delivery in February shed 3.63 dollars to close at US $35.35 a barrel on the New York Mercantile Exchange, the ninth consecutive drop in prices.

On London’s InterContinental Exchange, Brent North Sea crude for February delivery fell 3.75 dollars to settle at US $36.61 a barrel, the lowest since July 2004.

Analysts said the declines were driven by worries about a global recession that saps energy demand.

“The economic data remains decidedly weak," said John Kilduff at MF Global.

The latest reports from the United States confirmed ongoing grim conditions.

In the first decline in four months, personal income contracted 0.2% in November, surprising analysts who had expected no change.

Consumption expenditures shrank 0.6% in the month before Christmas, its fifth consecutive decline, according to the commerce department.

The labor department said separately that new US weekly jobless claims rose by 30,000 over the past week to 586,000, in another sign of a weak employment picture.

The figure was higher than the 558,000 expected by private economists and indicates employment, one of the best indicators of economic momentum, continues to struggle.

The market shrugged off a decline in US inventories of 3.1 million barrels, which normally would cause a rise in prices.

New York crude for January had plunged last Friday to US $32.40, lowest reading since February 9, 2004, as investors raced to sell before the contract’s expiry.

Analysts said that recent US data showing that the world’s biggest economy remains mired in a recession was likely to keep crude oil prices under pressure in the immediate term.

The Organization of the Petroleum Exporting Countries, which produces 40% of the world’s crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market. However, prices have continued to slide.

The price of crude oil has now collapsed by as much as 78% since hitting record highs above US $147 per barrel in July, as a sharp global downturn has slashed the world’s demand for energy.