Oil falls below $56 on grim financial outlook

11-14-2008 | AP

Negative financial news is affecting oil prices, because of lower demands

Panama Star WASHINGTON D. c. Oil prices continued to slide, to near $55 a barrel Thursday before rebounding slightly, as bad economic news from the world's largest economies heightened fears that a severe global downturn will slash demand for crude.

By midday in Europe, light, sweet crude for December delivery was down 13 cents to $56.13 a barrel, after falling to as low as $54.67, in electronic trading on the New York Mercantile Exchange.

In London, December Brent crude fell 36 cents to $52.01 a barrel on the ICE Futures exchange.

The Nymex contract fell $3.50 overnight to settle at $56.16, the lowest closing price since January 2007, after the U.S. Energy Department slashed its 2009 oil consumption forecast.

"As the global economy continues to weaken, we're going to see further downward pressure on oil," said Stephen Roach, chairman of Morgan Stanley Asia, in Singapore. "I think we'll certainly challenge the $50 threshold. We could challenge the $40 threshold."