Oil fell for a second day today, dropping more than 2 per cent to below $65 a barrel and set for its biggest ever monthly loss after weak US economic data refocused attention on falling demand.
US gross domestic product contracted at an annual rate of 0.3 per cent for the third quarter, the sharpest fall in the world's largest oil consumer in seven years, knocking commodities lower across the board on fears of further weakening fundamentals. A rebounding US dollar also weighed.
US light crude for December delivery fell $1.46 to $64.50 a barrel by 2.47am, adding yesterday's $1.54 loss that cut short a brief rally earlier in the week. Oil is now on track for a 35 percent loss this month, its biggest ever.
London Brent crude fell $1.30 to $62.41.
"Concerns that the weak international economic outlook will depress oil consumption remain a negative for the oil price," David Moore, commodity strategist for the Commonwealth Bank of Australia, said in a daily note.
Adding pressure on oil, the US dollar rebounded from lows fetched on Wednesday, making dollar-denominated commodities less attractive for investors.
Recent data showed demand was hit by high prices even before the crisis intensified, with revised US oil consumption in August tumbling 8.4 per cent from a year ago to 19.267 million bpd, with demand at its lowest for any month since December 2001, Energy Information Administration data showed.
Oil has more than halved since its record high of $147.27 from July as the economic crisis batters demand in the United States and other major consumers, and saps investor appetite for riskier assets including stocks and commodities.
Signs that OPEC is acting on its decision to cut output by 1.5 million barrels per day (bpd) have failed to lift prices. Nigeria announced a 5 per cent cut in exports in November and December after Abu Dhab made similar moves.
Reuters