• Home
• /
• Business

Oil sinks towards $63, set for record monthly slide

LONDON - Oil fell more than $1 to below $65 a barrel on Friday and was on track to post its biggest monthly fall yet. The slide followed weak U.S. economic data that gave the latest indication of sharply reduced demand for fuel from the world’s biggest energy consumer.

U.S. light crude for December delivery fell $1.80 to $64.16 a barrel by 1303 GMT. It has fallen by around 35 percent this month, its steepest decline to date.

London Brent crude was down $1.86 to $61.85.

“Oil is falling on a poor outlook for demand and the realisation that rate cuts will take a long time to lead to a recovery,” said Christopher Bellew at Bache Commodities.

Data released on Thursday showed U.S. gross domestic product contracted at an annual rate of 0.3 percent for the third quarter.

It was the sharpest fall in the world’s largest oil consumer in seven years and provoked further falls across commodities and global stock markets, which were also poised to record their worst month.

A stronger U.S. dollar, which makes dollar-denominated assets less attractive to buyers, added to the pressure on commodities.

In three months, oil has wiped out gains that took more than a year to build. It has lost more than half of its value since it struck a record high of $147.27 in July.

While focused on mounting evidence demand has been destroyed by economic weakness across the world, the market has largely ignored signs of tighter supplies.

Following a decision last week by the Organization of the Petroleum Exporting Countries (OPC) to cut output by 1.5 million barrels per day (bpd), evidence has begun to emerge that the group means what it said.

Kuwait on Friday was the latest OPEC member to inform its customers it was cutting crude supplies by 5 percent in November.

Nigeria and the United Arab Emirates told customers earlier in the week, they would receive less oil, but top exporter Saudi Arabia has yet to inform customers of any fresh curbs.

Venezuelan Oil Minister Rafael Ramirez said on Thursday OPEC should cut oil output by another 1 million bpd -- possibly before its next scheduled meeting in December -- and should set a minimum price target of $70 or $80 a barrel.