LONDON (AFP) — The price of oil plunged close to 65 dollars per barrel here on Wednesday, hitting a 17-month low after news that US energy stockpiles rose across the board last week, traders said.
The market was already facing intense selling pressure on renewed worries about energy demand in the face of slowing global growth and despite a likely OPEC output cut later this week, analysts said.
London's Brent North Sea crude for December delivery tumbled to 65.28 dollars per barrel, which was last seen on May 20, 2007.
New York's main contract, light sweet crude for December, sank as low as 67.50 dollars a barrel, which was last witnessed on June 27, 2007.
The US Department of Energy (DoE) revealed Wednesday that American crude oil reserves jumped 3.2 million barrels in the week ending October 17.
Gasoline or petrol inventories rose by 2.7 million barrels last week, the DoE added. The weekly US report is a central focus for the oil market because the United States is the biggest consumer of energy in the world.
Crude futures had gained some ground in recent sessions amid growing signals that OPEC is likely to cut production when the oil producers' cartel meets in Vienna on Friday.
However, worries about weaker energy consumption as the world's developed economies hit a weak patch have investors fretting, dealers said.
"At the moment, concerns over weakening demand seemingly outweigh the prospect of reduced supply stemming from the likelihood that OPEC will officially reduce output on Friday," said analysts at energy consultancy John Hall Associates.
"Any cut is likely to take at least a couple of months to have any measurable impact on the market though, so it remains to be seen how the market will interpret any decision."
They added: "With the prospect that growth in emerging economies is also now at risk, future demand growth forecasts may well be revised lower which would lead to prices possibly falling further."
Later Wednesday, London Brent oil changed hands at 66 dollars per barrel, down 3.72 dollars from Tuesday.
New York crude for December sank 4.16 dollars to 68.02. The November contract expired Tuesday, plunging 3.36 dollars to finish at 70.89 dollars a barrel.
Ahead of the OPEC meeting, several key members of the oil cartel have already voiced their support for production levels to be cut to shore up the market.
Oil prices have halved since striking record highs of above 147 dollars in July, prompting concern among OPEC nations about their falling revenues.
Iran's oil minister said Tuesday that Tehran believes OPEC should cut production by between two million and 2.5 million barrels a day, and that prices could go higher than 150 dollars a barrel.
Qatar's Energy Minister Abdallah bin Hamad al-Attiyah added that the "best price" for oil was 80 to 90 dollars a barrel while Libya said Monday it backed an output cut of more than one million barrels a day.
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