Oil inched lower on Wednesday, after falling 5 per cent a day ago to close below $60 for the first time since March 2007, as weakening energy demand more than offset news of more supply reductions.
News that OPEC may cut supplies by an additional 1 million barrels per day when it meets in Algeria next month did little to prevent the downward spiral that has knocked 60 per cent off oil's value from a record high of over $147 in mid-July.
US crude was trading 21 cents lower at $59.12 by 0246 GMT. In the last session, the market settled down $3.08 at $59.33 a barrel, its lowest settlement in 20 months. London Brent crude was also down 9 cents at $55.62.
"It's bearish news all around. I expect the IEA to further revise down the energy demand forecasts. A price of $55 is possible in the next few days," 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," he added.
China's industrial production growth slowed to about 8 per cent in the year to October, the first time it has been in single digits since the end of 2001, an official who is familiar with the data said earlier this week. The official data is due on Thursday.
In a research note, Credit Suisse added the US Department of Energy would probably cut its one-year WTI price forecast when its publishes its Short Term Energy Outlook 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 per cent for next year, from 6.4 per cent projected in June, due to a combination of financial turmoil, slower exports and weaker commodity prices.
An OPEC source said on Tuesday the cartel might cut oil output by a further 1 million barrels per day when it meets next month in Algeria because of slowing world demand.
OPEC agreed last month to cut production by 1.5 million bpd from Nov 1 after the sharp fall in oil prices.
US weekly inventory data was expected to show an 800,000-barrel rise in crude stocks last week as demand continues to slow, according to a Reuters poll of analysts.
Distillate stocks should rise by 500,000 barrels and gasoline by 800,000 barrels, according to the poll. The data will be released on Thursday, a day later than usual due to the US Veterans' Day holiday on Tuesday.