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Oil prices steady near 22-month lows

business Updated: Nov 19, 2008 10:47 IST
AFP
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World oil prices held steady on Wednesday at their lowest levels in about 22 months but analysts said they will drop even lower because of worries over falling energy demand.

New York's main oil futures contract, light sweet crude for December delivery, was three cents higher at USD 54.42 a barrel after closing Tuesday in New York down 56 cents at USD 54.39, its lowest since January 2007.

Brent North Sea crude for delivery in January was three cents higher at USD 51.87 after settling 47 cents lower at 51.84 today in London.

Concern for slowing global economic growth and its impact on energy demand has led oil prices to plummet from record peaks above USD 147 in July.

Prices should drop further to USD 43 or 44 a barrel before rebounding along with the global economy next year, CFC Seymour securities in Hong Kong said in a report.

"We believe prices will be in decline until evidence emerges that the US is on track to end its recession," CFC Seymour said.

Phil Flynn, of Alaron Trading, said oil "is being overwhelmed with the weight of the global economy".

A forecast yesterday by the Centre for Global Energy Studies (CGES) that world oil demand would likely contract this year for the first time in 25 years weighed on market sentiment.

The London-based energy market think-tank said prices have continued to fall despite the OPEC cartel's agreement last month to cut production by 1.5 million barrels per day. The price slide will continue "until real output cuts have been implemented," CGES said.

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