The Oil hits 12-month low

OIL prices slumped today to one-year lows under $US80 per barrel, striking $US75 in London, amid a global equities meltdown that sparked fears over demand for energy.

The International Energy Agency (IEA) also warned that the threat of recession and the ongoing financial crisis would erode oil demand and set back investment in new oilfields.

Brent North Sea crude for November plunged as low as $US75 - which was last witnessed on October 12 last year - as traders responded to renewed heavy falls on world stock markets.

The contract later stood at $US76.56 a barrel, down $US6.10 from yesterday.

Today, New York's main contract, light sweet crude for delivery next month, plumbed a one-year low of $US78.61 a barrel. It later stood at $US79.96, down $US6.63 from yesterday.

The sharp falls came despite news that OPEC will hold an emergency meeting next month on the impact of the markets crisis - amid speculation that the crude producers' cartel could cut output to safeguard precious oil revenues.

"The deteriorating outlook for world growth is leading to a violent correction in commodity prices," Deutsche Bank analysts wrote in a research note to clients.

"Further deterioration in the global GDP (gross domestic product) outlook could act as a trigger for lower oil prices," he said, adding that prices could fall to about $US60 per barrel.

The price of crude oil has now slumped by almost 50 per cent since striking record high points above $US147 per barrel on July 11.

The 12-nation Organisation of Petroleum Exporting Countries (OPEC) said yesterday it would hold an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.

The cartel's next regular meeting was scheduled for December 17 in Oran, Algeria.

At its last ordinary meeting on September 9-10, OPEC decided to cut its production of 520,000 barrels of oil per day to sustain oil prices above $US100 a barrel. Prices have since plunged dramatically.

In a monthly report published today, the Paris-based IEA said falling demand "in the face of higher prices is now being perpetuated by weakening economic prospects".

The IEA, energy policy adviser to major industrialised countries, cut its forecast for demand in the 30-nation OECD area this year by about 360,000 barrels per day.

Overall world demand this year would be 86.5 million barrels per day - a reduction of 240,000 barrels from the previous estimate, to show a rise of 0.5 per cent from last year.

The world forecast for next year was cut by 440,000 barrels per day to 87.2 million barrels per day, showing an annual increase of 0.8 per cent.