Oil slid by more than a dollar to below $88 a barrel today, as a series of bold rescue moves by policy makers around the world failed to lift fears the global economy was heading for a meltdown.
A much larger than expected rise in US crude and gasoline inventories underlined worries that the economic crisis would hit oil demand, a concern that has sent crude tumbling about $60 a barrel from its record high above $147 in July.
US light crude for November delivery fell $1.13 to $87.82 a barrel at 2.34am. Yesterday oil hit a 10-month low of $86.05, but pared some of those losses during the session.
London Brent crude fell 88 cents to $83.48 a barrel.
Yesterday's co-ordinated rate cuts were the latest salvo from financial policy makers in response to a crisis that has sent stock and credit markets around the globe into a tailspin, toppled banks in the United States and Europe and reshaped the US presidential election.
But the moves failed to lift battered stock or credit markets, and the International Monetary Fund added further gloom when it said the world economy was set for a major downturn with the United States and Europe either in or on the brink of recession.
"The slashing of borrowing rates was not enough to sustain the market as further demand destruction data as well as bearish U.S. inventory numbers caused traders to push the market lower once again," said Jonathan Kornafel, Asia director at options trader Hudson Capital Energy.
Commercial supplies of crude in the United States surged 8.1 million barrels to 302.6 million barrels in the week to Oct. 3, the Energy Information Administration said, more than triple the forecasts by analysts for a 2.3 million barrels increase.
Gasoline stocks rose 7.2 million barrels to 186.8 million barrels last week, EIA said, more than six times the 1.1 million barrel rise analysts had forecast, data showed.
Even statements from OPEC oil ministers that the producer group may cut oil output to bolster prices failed to lift sentiment.
Algerian state news agency APS reported the Organization of the Petroleum Exporting Countries (OPEC) planned an emergency meeting on Nov. 18 in Vienna.
"Although OPEC will be attempting to drive some support into the market ... we look for these efforts to provide only limited support," said Jim Ritterbusch, president of Ritterbusch & Associates.
Reuters