Perth - Oil fell nearly $3 to hit a one-week low below $70 a barrel on Wednesday, extending a 4% slide in the previous session, on mounting worries that output cuts by Opec will not be enough to offset slackening energy demand in leading consumers.
Expectations that a report from the US Energy Information Administration, due for release on Wednesday at 14:35 GMT, would show a rise in crude stocks and product inventories also weighed on oil prices.
US crude for December delivery fell $2.80, or 3.8%, to a week low of $69.42 by 04:29 GMT. November crude expired and settled down $3.36, or 4.5%, at $70.89 on Tuesday, wiping all of Monday's gains.
London Brent crude fell $2.52 to $67.20.
"Concerns over weakening oil demand have dampened the oil price, even though the Opec meeting is expected to lower production targets," David Moore, commodities strategist from the Commonwealth Bank of Australia, said in a note to clients.
Asian stocks fell on Wednesday, tracking losses in US markets as poor US corporate results fanned worries of a protracted economic slowdown.
Japan's benchmark Nikkei average dropped 4.3%, Australia's S&P/ASX 200 down 3% and Hong Kong's Hang Seng shed 2.8%.
"A lot of investors are beginning to use equities markets as a guide to decide how the economy will be doing and its all bearish at the moment," said Clarence Chu, a trader at Hudson Capital Energy in Singapore.
"The fundamentals are getting less and less important for oil these days. The market is just trading on sentiments."
Inventory outlook
The price of oil has slid more than 50% since hitting a record high above $147 in mid-July. It briefly touched a 16-month low of $68.57 last week on worries that the financial crisis would slash energy demand in the United States, the world's largest energy consumer, and other industrial countries.
A Reuters poll of US inventory data due out later on Wednesday calls for crude oil to show a 2.6 million barrel build. Also forecast is a 100 000 increase in distillates and a 2.8 million barrel build in gasoline stocks.
US weekly retail gasoline demand to October 17 fell 6.4% year-on-year, Mastercard Advisors said on Tuesday, though it rose compared with the previous week.
The Organisation of the Petroleum Exporting Countries (Opec) was due to meet in Vienna on Friday and is expected to reduce output to defend prices and temper the effects of the financial crisis.
Opec Secretary General Abdullah al-Badri has led the call for output cuts, telling reporters on Tuesday that the world would face a huge oversupply of oil next year, if leading producers failed to cut supply.
Though oil prices staged a strong rally earlier this week on expectations that Opec would make significant cut to output, fears of a global recession have returned to haunt commodities.
The current US economic downturn could be worse than the 1990-91 recession, with growth restrained for as long as one to three years, a top Federal Reserve policy-maker said on Tuesday.
- Reuters