Oil prices fell toward $53, touching a fresh 22-month low this morning, due to increasing signs of weakening demand as economic gloom deepened.
US light crude fell as low as $53.30 a barrel, the cheapest price since January 2007. It was trading 69 cents lower at $53.70 by 9.26am. London's Brent crude fell $1.23 to as low as $50.61. Oil has slid by about one-third from its record highs above $147, struck in July.
"With no end in sight for the global economic turmoil, traders continue to focus on the lack of demand heading into 2009," said Jonathan Kornafel, Asia director of US-based options trader Hudson Capital Energy.
"It is becoming quite evident that demand may actually drop from 2008 to 2009."
European and Asian shares fell as Japan's No.3 bank joined larger rivals seeking to bolster its capital in the face of the worst financial crisis in 80 years. Markets fretted over the stricken US car industry.
European Central Bank President Jean-Claude Trichet said the deep crisis was the first time since World War Two that the finances of the industrial world have been at stake.
The oil market was also closely watching US weekly oil data due out at 1.35pm on as well as any moves from the Organisation of Petroleum Exporting Countries (OPEC) at their meeting next week.
Analysts in a Reuters poll expected the US oil data would show an increase of 800,000 barrels of crude stocks, and a 400,000 barrel rise in gasoline inventories. Distillate stocks, which include heating oil and diesel, were forecast to have risen 600,000 barrels.
The American Automobile Association (AAA) motor group said yesterday US travel for the upcoming Thanksgiving holiday next week would decline for the first time since 2002.