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Oil prices slump below 60 dollars

Oil prices slid below 60 dollars on Thursday for the first time since late May, extending sharp losses seen in recent days on concerns about weak energy demand.

business Updated: Jul 09, 2009 21:21 IST

Oil prices slid below 60 dollars on Thursday for the first time since late May, extending sharp losses seen in recent days on concerns about weak energy demand.

New York's main contract, light sweet crude for August delivery, fell 53 cents to 59.61 dollars a barrel.

Brent North Sea crude oil for delivery in August dropped 20 cents to 60.23 dollars a barrel in afternoon London trade.

Prices have fallen heavily since Wednesday when data released by the US Department of Energy (DoE) showed that the country's gasoline (petrol) reserves increased by 1.9 million barrels in the week ending July 3, more than double market expectations.

Gasoline reserves usually fall at this time of the year as Americans take to the roads for their summer holidays, but analysts said the recession has taken a toll on consumer spending.

"It appears that -- at least for the short term -- the sentiment in oil markets has turned bearish and weak fundamentals (of supply and demand) are in the spotlight," analysts at the JBC Energy consultancy said on Thursday.

The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday said it had lowered its medium and long-term forecast for global demand because of the worldwide recession.

In its World Oil Outlook 2009, OPEC said that under its revised main forecast oil demand would be "less than 106 million barrels per day (bpd) in 2030, down from 113 million bpd."

G8 leaders on Wednesday agreed that 70-80 dollars was a fair price to pay for a barrel of oil, according to Russian President Dmitry Medvedev.

British Prime Minister Gordon Brown and French President Nicolas Sarkozy have called for more stable crude futures after a 12-month period which has seen the price for a barrel of crude fluctuate between 32 and 147 dollars.

Oil prices have meanwhile slid this week despite fresh attacks to pipelines in Nigeria. Nigerian militants on Wednesday said they blew up two key oil pipelines as they stepped up attacks in response to a government amnesty offer.

The Movement for the Emancipation of the Niger Delta (MEND) said it had blown up pipelines operated by the Anglo-Dutch giant Shell and Italian group Agip in a pre-dawn attack in the Bayelsa state.

MEND, the best equipped of a number of rebel groups operating in the restive southern oil hub, has claimed at least seven attacks since the government's amnesty offer on June 25.

The militants say are on a campaign to cripple the oil industry until their complaints of injustices and inequitable distribution of the oil wealth are answered.

Unrest in Nigeria since 2006 has cut Nigeria's daily crude output by around 30 percent to 1.8 million barrels.