NEW YORK (AFP) — Crude oil prices careened lower Wednesday after surging US energy reserves highlighted falling demand in a cooling global economy, and ahead of an OPEC financial crisis meeting.
A sharp rise in the dollar also put pressure on the dollar-priced commodity, making it more expensive for buyers using relatively weaker currencies.
New York's main contract, light sweet crude for December, skidded 5.43 dollars to close at 66.75 dollars a barrel. It earlier fell as low as 66.20 dollars, the lowest level since June 14, 2007.
In London, Brent North Sea crude for December delivery tumbled 5.20 dollars to settle at 64.52 dollars per barrel, a level last seen on May 7, 2007.
Oil prices extended Tuesday's losses as the market focused on weakening global demand instead of the OPEC meeting in Vienna on Friday that has raised expectations the cartel will cut production to shore up sagging prices.
The US Department of Energy's weekly report on US energy inventories deepened the gloom with stronger than expected increases .
The DoE said crude oil reserves jumped 3.2 million barrels, to 311.4 million barrels, in the week ended October 17.
Analysts' consensus forecast was for a rise in crude of 2.4 million barrels.
Gasoline inventories rose by 2.7 million barrels last week, slightly uder expectations of a 2.8 million rise.
The world's largest energy consumer continued to show slowing demand.
Over the past four weeks, Americans' average consumption of petroleum products fell 8.5 percent from the same period a year ago, the DoE said.
With global economic concerns at the forefront, and recession fears mounting in Europe, the dollar leapt to a nearly two-year high against the euro, underpinning the oil market.
"Dollar strength helps this movement," said Thierry Lefrancois, analyst at Natixis.
Oil prices have more than halved since striking record highs of above 147 dollars in July as the intensifying global financial crisis began pummeling economies.
The president of the Organization of the Petroleum Exporting Countries, Algeria's oil minister Chakib Khelil, said Wednesday that an upcoming decision by the cartel to cut oil production must consider both consumers and producers hit by a global financial crisis.
"The decision has to take into account the interests of the consumers but also (has to) take into account the interests of the producers," Khelil told reporters on arrival in Vienna ahead of Friday's OPEC meeting.
OPEC members are calling for a substantial cut to the cartel's output to help shore up oil prices.
"This is going to be a very important meeting," said Khelil. "It comes in the middle of a financial crisis where lots of countries have been affected," he added, in reference to both oil-consuming and producing nations.
The OPEC president said that the cartel did not want producers, affected by the financial crisis, to be further hit by "very low" oil prices, which reduce their incomes.
John Kilduff at MF Global said that OPEC's memories were "still fresh from the 1998 price collapse" when oil fell to less than 10 dollars a barrel.
"The great fear is that falling demand will result in global stockpiles backing up," he said.
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