Oil prices fell to 17-month lows at USD 63 a barrel on Monday in Asia as investors weighed Friday's OPEC output cut against growing evidence of a severe global economic slowdown that would undermine crude demand.
Light, sweet crude for December delivery fell 32 cents to USD 63.83 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.
Investors brushed off a 1.5 million barrel-a-day cut announced by the Organisation of Petroleum Exporting Countries on Friday, focusing instead on falling crude demand as economies across the globe reel from the impact of a credit crisis.
On Friday, oil fell USD 3.69 to settle at USD 64.15. Prices have plunged 57 per cent from a record USD 147.27 on 11th July.
"The mood is fairly negative reflecting worry about the international economic outlook," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.
"If there is further weak economic data in the US or Europe, prices could come under more downward pressure."
Iran's OPEC governor Mohammad Ali Khatibi said on Sunday a reduction in production "will be considered" at the group's next meeting in Algiers in December - a meeting that might even be held early if necessary.
"I thought the OPEC cut was a fairly decisive act, but concerns of recession in the major economies remain dominant," Moore said. "OPEC's cut does take a step toward tightening the market."
Investors have been paying close attention to signs that a slowing economy and higher gasoline prices earlier this year have hurt crude demand in the US, the world's largest oil consumer.
The US Department of Transportation said Friday that Americans drove 5.6 per cent less, or 15 billion fewer miles (24 billion fewer kilometers), in August compared with same month a year ago - the biggest single monthly decline since the data was first collected regularly in 1942.
Oil investors have also been eyeing stock markets to gauge sentiment on global economic health.
Most Asian stock indexes fell on Monday, led by Hong Kong, South Korea and Australia. Japanese shares rebounded slightly after plummeting last week.
The Dow Jones industrial average fell 3.6 per cent Friday.
"If we're looking a severe economic downturn, it's hard to say what the bottom of any commodity price will be," Moore said.
In other Nymex trading, heating oil futures rose 0.13 cent to USD 1.95 a gallon, while natural gas for November delivery fell 19.8 cents to USD 6.04 per 1,000 cubic feet.
In London, November Brent crude was down 60 cents to USD 61.45 a barrel on the ICE Futures exchange.
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