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NEW YORK: World oil prices skidded on Wednesday on recession fears that swept markets after massive government interventions to kick-start frozen credit flows in the global financial crisis.
New York's main contract, light sweet crude for November, slid 4.09 dollars to close at 74.54 dollars.
In London, Brent North Sea crude futures plunged below 70 dollars in electronic trading after the market close, dropping below the level for the first time since June 2007.
Brent fell as low as 69.97 dollars a barrel, after settling 3.73 dollars lower at 70.80 dollars.
The futures contracts had fallen to intraday lows of 74.32 dollars in New York and 70.21 dollars in London, levels last seen in August 2007.
"The oil market is caught in the wake of four tsunamis: a global recession, tighter credit, increased refining capacity, and rising non-OPEC supplies - all of which pressure the demand for OPEC crude," JPMorgan analyst Lawrence Eagles said in a report.
"The developments ... have taken perceived recessionary economic conditions to a state that is far more concrete, and severe," he said.
The Organisation of the Petroleum Exporting Countries slashed its estimate of growth in demand this year and shaved its estimate for 2009, citing an "excessive" easing of demand in the United States, the single biggest energy consumer.
The organisation's monthly report noted "bearish" oil price trends and signs of "recession" in the US, Europe and Japan.
OPEC member Nigeria's oil minister Odein Ajumogobia said his country is concerned about falling oil prices,
"Of course we are concerned because we are budgeting based on a benchmark price and we have to obviously try and ensure that we meet our budget. If the price falls below the budget, there will be consequences. Of course it's a matter of concern to all oil-producing countries," he told AFP.
Crude oil prices, which hit record highs above 147 dollars in July, have since slid on demand concerns in a slowing global economy facing the worst financial crisis since the 1930s Great Depression.
Ajumogobia declined to say what Nigeria would propose at a special OPEC meeting on November 18. Several OPEC members have called for the meeting to decide on an output cut to shore up falling prices.
"Falling energy prices, particularly gasoline, will be a boon to recovery, just as the reverse situation represented a hindrance. Hopefully, OPEC understands this and does not suffer a self-inflicted blow by tightening production quotas, at a time when their consumers are laid out flat," said John
Kilduff at MF Global.
Prices also were under pressure on news that a Nigerian court had ordered Anglo-Dutch energy giant Royal Dutch Shell to hand over land to locals, a key demand of armed rebels camped in Nigeria's oil-producing region.
Oil prices are sliding on "concerns that the coordinated action by central banks over the last week will not be enough to rescue economies from falling into a global recession and hence weighing on oil demand," Sucden analyst Nimit Khamar said.
San Francisco Fed president Janet Yellen said on Tuesday that the United States "appears to be in a recession." There are also growing fears Japan and Europe are heading for a spell of economic stagnation or recession.
Markets awaited the latest weekly snapshot of US energy inventories due on Thursday for clues about demand in the world's biggest energy consumer.
The data was postponed a day due to a public holiday on Monday. - AFP/de
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