16 Jan 2009

Oil falls 9% on sagging demand outlook

7:33 am on 16 January 2009

Oil prices have fallen more than 9% to a one-month low on expectations that world energy demand will keep shrinking.

By 12:30pm EST (1730 GMT) on Thursday, US crude was down $US3.44 to $US33.84 per barrel after falling to $US33.70 - the lowest since 19 December.

London Brent fell 90 cents to $US44.18 per barrel, maintaining a premium over the US price.

Oil prices previously reached a record of $US147.27 per barrel on 11 July, 2008.

The losses came the number of people filing new claims for unemployment benefits rose last week in the United States. Foreclosure activity also rose 81% in 2008, suggesting the recession is deepening.

The Organization of Petroleum Exporting Countries on Thursday forecast a fall of 180,000 barrels per day in world oil demand this year - 30,000 bpd steeper than its previous forecast.

Earlier this week, the US Energy Information Administration forecast a world consumption drop of more than 800,000 bpd this year.

OPEC has already cut supply by about 4 million bpd since September to try to halt the slide in oil prices.