Oil fell below $65 a barrel today, extending a 7 per cent overnight drop, weighed down by a strengthening dollar and as dismal economic data in the United States sharpened fears of a deep and lasting global recession.
Growing US fuel stockpiles, which underscored slackening oil demand, and a sharp slide in Asian stocks also helped pull oil prices lower.
US light crude for December delivery fell 82 cents to $64.48 a barrel by 7am, around 4 per cent above last week's 17-month low of $61.89, after shedding $5.23 to settle at $65.30 on Wednesday.
London Brent Crude fell 98 cents to $60.89, after declining as much as $1.06.
"The US dollar and Asian stock markets are weighing on oil. The outlook is still very bearish and the set of US economic data over the next few days may push oil prices lower," said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
On Thursday, the euro and sterling fell against the dollar, pressured by expectations that the European central bank and the Bank of England will cut interest rates to save their economies from further deterioration.
The initial euphoria of Election Day in the United States fizzled swiftly, as Democrat Barack Obama's first day as president-elect was marked by reports of deep cuts in employment by private employers, bringing worries about a weakening global economy back to the fore.
Growing fears of a protracted global recession also dragged down commodity-related currencies as well as Asian stocks, which tumbled nearly 7 per cent today.
Analysts said traders will be eyeing news of key US economic indicators, including a government report on weekly jobless claims due today at 1.30pm (Irish time) and Friday's unemployment data, to gauge how the economy of the world's largest oil consumer is faring.
Reports released overnight showed US employers have cut 157,000 private sector jobs last month, while the service sector contracted sharply as the worst financial crisis in 80 years hammered the world's largest economy.
News that investment bank Goldman Sachs planned to lay off another 3,200 employees and bellwether finance company GMAC reported a $2.52 billion loss for the third quarter added to the gloom.
Reuters