Jobs figures depress oil prices

US oil prices have fallen to their lowest levels since December 2004 after figures in the US showed that 533,000 people lost their jobs last month.

The unexpectedly high losses sent US light, sweet crude down $2.82 to $40.85 a barrel, before recovering slightly.

In London, Brent crude closed even lower - down $2.42 at $39.86 a barrel.

Fresh signs of weakness in the US economy tend to depress the oil price because they suggest there will be less demand for oil in future.

At the close, US oil prices were down $1.93 at $41.74 a barrel.

Even before the fall in London, there had already been suggestions that the US oil price could soon be heading below $40 a barrel.

"We first hit $40 in 2004 and prices then started accelerating up from there. We still have to find where the bottom line is for the prices," said fund manager Tetsu Emori at Astmax.

Opec meeting

Oil prices are more than $100 below their $147 a barrel highs seen in July this year.

Many eyes are now on Opec, as the oil cartel decided not to cut production at its meeting last weekend.

On Thursday, Opec President Chakib Khelil urged the cartel to cut output at its next meeting in Algeria on 17 December.

Analysts at Merrill Lynch have said that prices may fall below $25 a barrel before they recover.

"A temporary drop below $25 is possible if the global recession extends to China," the US bank said in a research note.

Merrill Lynch has recently cut its forecast for average oil prices in 2009 from $90 to $50 a barrel.