Reuters LONDON
OIL fell towards $70 on Tuesday, pressured by expectations that a global recession will crush demand for oil, which could limit the impact of any supply cuts by Opec. US light crude for November delivery was down $3.85 at $70.40 a barrel by 22:00 pm IST, after earlier hitting a session high of $75.69. The market hit a record high above $147 in mid-July. London Brent crude was $3.56 down at $68.47 a barrel.
The Organisation of the Petroleum Exporting Countries is due to meet in Vienna on Friday, when the producer group is expected to reduce output to defend prices. Iran has said a drop in demand could push Opec to cut output by 2-2.5 million barrels per day.
Opec is meeting after a 50% fall in oil prices in just three months from a record peak above $147. The sharp drop partly reflects falls in demand from the US, the world's top energy consumer and other industrial countries, which are suffering the effects of the credit crisis. "A cut of about 2 million barrels per day will only offset the amount of US demand that has been lost on a year-overyear basis," said Edward Meir of broker MF Global.
Opec could face an intense debate at their meeting on how much oil they should take off global markets as they balance their price needs against risks to a fragile world economy. The International Energy Agency, which advises industrialised countries, has said an Opec output cut could prolong a global economic slowdown.
Oil and other commodities have been tracking moves in equity markets in the past few weeks. "I think they moved in line with equities on Monday and are now pulling back, using stock markets as a barometer for demand," said Christopher Bellew at Bache Commodities.
European shares gave up early gains that had followed a rise in U.S. stock markets on Monday on hopes of more government aid to the economy.
The US currency was near one-and-halfyear high versus a basket of currencies, which put pressure on dollar-denominated commodities, including oil and gold.
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