Oil price falls as Japan, China warn on demand

OIL prices are sliding towards $US50 a barrel, after hitting a 21-month low yesterday amid concerns the deepening financial crisis will curb demand.

Faltering consumption has already swiped two-thirds from the fossil fuel’s value since its record high of nearly $US150 a barrel in July.

Light, sweet crude for December delivery closed just under $US55 a barrel in New York last night — its lowest level since January 2007. Brent crude also traded lower in London.

Prices were dragged lower by news that Japan — the world’s second biggest economy — had followed Europe into recession.

A warning from China National Petroleum Corp that demand had fallen since September because of the credit crunch also prompted speculators to sell out.

Analysts warned trading would remain volatile over the near term, while the market priced in the worse-than-expected impact of the US slowdown on China‘s economy.

Crude was trading slightly higher in both New York and London last night, after the US National Weather Service forecast colder-than-normal weather on the US east coast later this month.

The Organisation of Petroleum Exporting Countries will hold an extraordinary meeting in Cairo on November 29 amid speculation the cartel of oil-rich nations will again cut output in a bid to stimulate prices.