NEW YORK (AFP) — Oil prices tumbled Wednesday as traders worried about slipping demand for energy amid a financial crisis battering the global economy.
New York's light sweet crude on Wednesday finished at 56.16 dollars a barrel, down 3.17 dollars from its Tuesday close.
In London, Brent North Sea crude slumped 3.34 dollars to settle at 52.37 dollars a barrel.
Oil prices dropped to intraday lows of 55.83 dollars in New York and 52.05 dollars in London, their lowest levels since March and January 2007, respectively.
"Prices continued to fall amid an increasingly deteriorating global economic outlook," said Nimit Khamar, an oil analyst at the Sucden brokerage in London.
"The demand situation is deteriorating fairly quickly."
The US Energy Information Administration predicted oil prices would remain somewhat steady in the lower 60 dollar range next year, saying levels "will primarily depend on the magnitude and duration of the economic downturn as well as OPEC and non-OPEC behavior."
"The current US and global economic downturn has led to a decrease in global energy demand and a rapid and substantial reduction in crude oil and other energy prices," the EIA said in its monthly outlook report.
It said its projections assume that an OPEC production cut would limit, but not reverse, the recent sharp fall in oil prices.
"We project oil prices to remain relatively flat, averaging 60 to 65 dollars per barrel throughout 2009," the Energy Department unit said. "The condition of the global economy is expected to remain the most important factor driving world oil prices."
The benchmark New York contract was forecast to average 63.50 dollars per barrel in 2009.
The market was anticipating the EIA's latest weekly snapshot of energy inventories for clues to supply and demand in the world's biggest economy, delayed a day until Thursday because of the Veterans Day holiday Tuesday.
Falling prices could lead oil producers to shelve plans to pump more crude, energy leaders warned.
"If these prices continue ... many projects will be postponed" and there will be an "energy crisis in two years," Libya's Oil Minister Shukri Ghanem told AFP in a phone interview.
Libya is a member of the Organization of the Petroleum Exporting Countries that supplies 40 percent of the world's crude. Some cartel members have called for further production cuts to shore up falling prices.
OPEC is scheduled to meet in Oran, Algeria, on December 17.
The International Energy Agency warned that dwindling crude reserves were pivotal to prices.
"The key determinant in the years to come is the oilfield decline more than demand," IEA chief economist Fatih Birol told a news conference in London at which he unveiled the agency's latest World Energy Outlook report.
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