5 Dec 2008

Oil falls sharply amid gloomy job report

8:52 pm on 5 December 2008

Oil prices have fallen to almost four-year lows after more bad economic data in the United States, including unemployment benefit rises and big job cuts.

US light crude fell more than $US3.12 a barrel to $US43.67 on Thursday, its lowest level since January 2005.

London Brent fell by $US3.16, to $US42.24 a barrel, also a near four-year low.

Merrill Lynch analysts forecast that the price could fall as low as $US30 a barrel should China fall into recession and OPEC fail to cut production.

Despite this worst-case scenario, Merrill Lynch forecast an average oil price of $US50 a barrel in 2009.

Oil prices are more than $US100 below their $US147 a barrel highs seen in July this year.

Figures released earlier on Thursday showed US unemployment benefit claims at a 26-year high. Telecommunications giant AT&T and other major US companies also announced big job cuts.

The Organisation of the Petroleum Exporting Countries will consider another round of production curbs when it next meets on 17 December in Algeria.

The cartel cut production by 1.5 million barrels per day in October.