Oil prices slump under US$63
Posted: 08 July 2009 0451 hrs

	Photos  of

NEW YORK: Oil prices dived underneath 63 dollars per barrel on Tuesday, hitting the lowest levels since May, amid heightened concerns about energy demand in a struggling global economy.

New York's main contract, light sweet crude for August delivery, tumbled 1.12 dollars from Monday's closing price to 62.93 dollars a barrel.

The contract lost nearly three dollars on Monday.

London Brent North Sea crude for delivery in August dropped 82 cents to 63.23 dollars a barrel, after touching a low of 62.73.

Prices had rebounded slightly earlier on Tuesday - but the gains were wiped out amid fresh losses on Wall Street.

"Clearly, a diminution of demand expectations, as a consequence of disappointing economic data, is the primary motivation for sellers," said Mike Fitzpatrick of MF Global.

"That decision is made much easier with prices running ahead of the market's fundamentals."

Although crude stockpiles have fallen for several successive months, Fitzpatrick said historically low refining margins may also cause inventory to build up again later.

Wall Street slumped again on Tuesday as investors mulled prospects ahead of the second quarter earnings season and the possibility of added government stimulus to jolt the economy from recession.

Oil had hit 10-week lows on Monday after recent US data showed job losses surged more than expected to 467,000 in June, raising fresh doubts about the pace of recovery in the United States, the world's biggest energy user.

"With an apparent shift in macroeconomic perceptions towards the nature of a recovery, the oil market continued to be in the grips of souring sentiments," Barclays Capital analysts said in a note to clients.

The Energy Information Administration, a US government agency, said in a forecast on Tuesday that the new York contract could hit 69.50 dollars a barrel in the second half of the year, three dollars higher than its previous view.

In 2010, crude will probably average 72.42 dollars a barrel, the EIA said, five dollars more than the last forecast.

Investors are also monitoring the situation in Nigeria where militants have continued to carry out attacks on oil installations and kidnapped oil workers in the country's crude-producing Niger Delta region.

Militants of the Movement for the Emancipation of the Niger Delta (MEND) said on Monday they destroyed a Chevron oil pipeline junction and seized six crew from a ship in the latest attacks on Nigeria's key money earner since an amnesty offered by the government last month.

Oil prices have slumped owing to the severe economic downturn after striking historic peaks of more than 147 dollars a barrel a year ago. - AFP/de