Oil prices continue to tumble

Oil prices fell to another near two-year low today as traders predicted the economic downturn would hit demand.

Light, sweet crude on the New York Mercantile Exchange – the benchmark price - was down 92 cents to $52.70 a barrel in Asian trading. London Brent crude was more than 1% lower at $51 a barrel.

Analysts, spurred by plummeting stock markets, said New York oil was expected to hit the $50 mark “sooner rather than later”.

Toby Hassall, an analyst at Commodity Warrants Australia, said: “People are saying this slowdown could be the worst since the Great Depression.”

He added: “The stock markets are representing investor pessimism regarding the economic outlook and what we have in store over the next year.”

Concerns that US Congress may decide not to approve a $25bn (€20bn) rescue package for ailing car makers General Motors, Ford and Chrysler helped drag the Dow Jones industrial average down 5.1% yesterday to its lowest level since March 2003.

It is believed that a production cut by the oil countries of Opec may stop prices falling further.

The group is holding an informal meeting later this month ahead of its official December conference and Opec president Chakib Khelil has signalled that the organisation may announce production cuts at the formal summit.

Investors have brushed off news that earlier in the year would have sent prices higher.

On Tuesday, Chevron invoked “force majeure” on 90,000 barrels of Nigerian production after a pipeline was breached by militants in the Niger Delta.

Earlier this week, Somali pirates hijacked a Saudi supertanker carrying oil worth $100m (€80m).