Oil continues to slide on recession threat

US Crude Prices Drop $4 To $67 A Barrel; London Brent Falls Below $66

 OIL fell to a new 16-month low below $70 a barrel on Wednesday, as a big rise in US fuel inventories last week provided further evidence of an economic slowdown in the world's biggest energy consumer. Gloom about the global economic outlook could limit the impact of any oil supply cuts Opec might agree at a meeting on Friday.
    US light crude for December delivery was down $4.30, or 5.9%, at $67.88 a barrel by 22:30 pm IST. It touched a session low of $67.50, its lowest since June 2007. London Brent crude was down $3.76, or 5.4%, at $65.96 a barrel.
    US crude oil stocks rose by 3.2 million barrels last week, more than the 2.6 million barrels analysts had forecast. The Energy Information Administration also reported a rise of 2.7 million barrels in gasoline stocks versus forecasts for a 2.8 million increase.
    "The numbers look bearish on virtually all fronts," said Jim Ritterbusch of Ritterbusch & Associates, adding "The data reinforces our bearish view and ups the probability of $62 crude".
    Oil has been tracking downward moves in global equity markets, which have been reacting to increasing evidence of a global slowdown. Steep falls in European and US stock markets, plus the US dollar's rise to a 2-year high against a basket of currencies on Wednesday helped drive down oil and other commodities.
    "The relationship between oil and equities could be tested by any decision by Opec to reduce production at this week's meeting," said Frances Hudson, global thematic strategist at Standard Life Investments.
    The price of oil has more than halved from a record high above $147 in July as the financial crisis has started to hit energy demand in the US, the world's largest energy consumer, and other industrial countries. The Organisation of the Petroleum Exporting Countries called an emergency meeting this Friday, when the producer group is widely expected to agree to cut supply to defend prices.
    Opec secretary general Abdullah al-Badri has said that the world would face a huge oversupply of oil next year, if production continued at current rates. Badri is in Moscow where he met Dmitry Medvedev, president of Russia, which is the world's second largest oil exporter after Saudi Arabia.