Growing evidence of a severe global economic slowdown drove oil prices to below $62 a barrel Monday, as investors brushed off a sizable OPEC output cut.
Traders were taking their cues from world markets, which slumped again Monday with the Nikkei index in Japan closing at its lowest in 26 years, down 6.4 percent. Hong Kong, and European markets followed suit, closing or trading substantially lower. The Dow Jones industrial average fell 3.6 percent Friday.
Light, sweet crude for December delivery declined $2.23 to $61.92 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe, the lowest since May 2007.
On Friday - even after the Organization of Petroleum Exporting Countries announced a 1.5 million barrel-a-day cut - oil fell $3.69 to settle at $64.15. Prices have plunged 57 percent from a record $147.27 on July 11.
"The mood is fairly negative reflecting worry about the international economic outlook," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "If there is further weak economic data in the U.S. or Europe, prices could come under more downward pressure."
Iran's OPEC governor Mohammad Ali Khatibi said Sunday a reduction in production "will be considered" at the group's next meeting in Algiers in December - a meeting that might even be held early if necessary.
"I thought the OPEC cut was a fairly decisive act, but concerns of recession in the major economies remain dominant," Moore said. "OPEC's cut does take a step toward tightening the market."
Vienna's JBC Energy said prices were out of OPEC's control - for now.
"Oil is currently being driven by the present financial crisis and not by OPEC cuts," said its research report. "As oil prices are being pressured by the credit squeeze and a lack of liquidity, they may stay largely detached from supply factors for several weeks to come. As a result, OPEC is currently struggling with factors beyond its control."
Investors have been paying close attention to signs that a slowing economy and higher gasoline prices earlier this year have hurt crude demand in the U.S., the world's largest oil consumer.
The U.S. Department of Transportation said Friday that Americans drove 5.6 percent less, or 15 billion fewer miles (24 billion fewer kilometers), in August compared with same month a year ago - the biggest single monthly decline since the data was first collected regularly in 1942.
"If we're looking a severe economic downturn, it's hard to say what the bottom of any commodity price will be," Moore said.
In other Nymex trading, gasoline futures fell more than 3 cents to $1.44 a gallon, while heating oil slipped by more than 4 cents to $1.91 a gallon. Natural gas for November delivery fell nearly 21 cents to $6.03 per 1,000 cubic feet.
In London, November Brent crude was down $1.75 to $60.30 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy contributed to this report from Singapore.
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