Brent North Sea crude for delivery in January dropped 48 cents to US$51.83 a barrel in morning trade on London’s InterContinental Exchange (ICE).

On the New York Mercantile Exchange (NYMEX), light sweet crude for December delivery slipped 43 cents to US$54.52 a barrel.

“Global oil demand is expected to contract in 2008 for the first time for a quarter of a century,” London-based CGES said in its latest monthly report published on Tuesday.

“OPEC’s emergency agreement last month to cut production by 1.5 million barrels per day has so far failed to halt the price slide and will not do so until real output cuts have been implemented.”

The Organization of Petroleum Exporting Countries, which produces 40 percent of world oil, has so far failed to fully implement its output cut set to have begun on November 1, according to analysts.

“Oil demand forecasts continue to be revised downwards and a year-on-year contraction in global oil demand in 2008 and 2009 is now a very real possibility for the first time for 25 years,” CGES said on Tuesday.

“The path of oil prices will depend on how, and how quickly, OPEC cuts production in response to the falling demand for its oil,” the energy consultancy added in its report.

Iran, OPEC’s number-two oil producer, had said over the weekend that it backs a new output cut by the cartel of 1.0-1.5 million barrels a day. The organization will next meet on November 29 in Cairo, followed by a summit in Oran, Algeria, two weeks later.

OPEC meanwhile said Monday that it was ready to intervene on a regular basis to help prop up the market.

Oil prices have plunged almost two-thirds since striking record highs of above US$147 in July as a global economic slowdown dents world energy demand.

Prices in London last week slumped to three-and-a-half-year lows close to US$50, prompting the OPEC exporters’ cartel to call an emergency meeting in Cairo to discuss output levels.

Subscribe to The China Post and save.  Click here

SharePrintEmail

Write a Comment

Enter your comments - 1000 characters max

Type in image code

Submit

 Receive China Post promos Respond to this email