OIL BRIEFLY plunged below US$69 a barrel Thursday, bringing its price to less than half its July record high after the government reported massive increases in US crude and gasolene supplies.
In London, crude closed even lower below US$67.
Investors took the news as more evidence that a global credit crisis and a shaky economy are curbing demand for oil, which at one point Thursday fell to its lowest level in nearly 16 months.
The sell-off in crude came despite an announcement by Organisation of Petroleum Exporting Countries (OPEC) on Thursday that it was moving up by almost a month an emergency meeting to discuss oil's rapid drop in value, including whether or not a production cut is needed.
Urgent meeting
OPEC will now meet October 24 at its headquarters in Vienna, Austria, instead of November18.
Light, sweet crude for November delivery dropped as low as $68.57 a barrel on the New York Mercantile Exchange before paring some of its losses to trade down US$3.14 at US$71.40. It was crude's lowest trading level since June 27, 2007.
Crude has now fallen 52 per cent since surging to a record US$147.27 on July 11.
Some energy analysts have predicted oil could fall as low as US$50.
In London, November Brent crude fell $4.21 to US$66.59 a barrel on the ICE Futures exchange.
Analysts doubt a production cut by OPEC, which investors view as increasingly likely, would do much to suspend oil's free fall.
OPEC's decision last month to cut production by 520,000 barrels a day hardly made a dent in oil prices.
"I think the market has already priced in another 500,000 barrel production cut and it doesn't care," Flynn said.
He said OPEC's decision to move up their extraordinary meeting underscores the cartel's anxiety about oil's stunning drop in value.
Analysts believe several OPEC members, particularly Venezuela and Iran, budgeted their national spending based on oil at much higher levels, meaning they'll face substantial revenue shortfalls as prices come down.
"They're panicking," Flynn said. "If they come in and cut production and oil falls to $60, they're going to look like they've lost control, which they have."
- AP
