NEW YORK ? Oil prices tumbled nearly seven percent Thursday on expectations that demand would slow further after the International Monetary Fund predicted developed economies would deliver their worst performance since World War II.
US crude settled $4.53 lower at $60.77 a barrel, adding to a 7.0-percent drop on Wednesday. London Brent crude dropped $4.44 to settle at $57.43 a barrel.
The IMF said it now expects 2009 global economic growth of 2.2 percent, down 0.8 percentage point from its October forecast. It also lowered its 2009 baseline oil price projection to $68 a barrel from $100.
Oil prices have dropped from record highs above $147 a barrel in July as the growing global economic crisis damps demand in developed economies.
US government data released on Wednesday showed an unexpected rise in gasoline stocks last week, following a 2.3- percent fall in demand in the world's biggest energy consumer.
"Oil prices slipped back further into a recently established trading range yesterday and overnight, as the focus of participants was on the threats to demand posed by a contracting global economy," John Kilduff, senior vice president at MF Global, wrote in a research note.
Growth in US productivity slowed sharply during the third quarter despite efforts by businesses to keep it aloft by slashing payrolls, the Department of Labor said.
Britain and Europe slashed interest rates on Thursday just ahead of the IMF forecast, but the moves failed to halt the slide of global stock markets.
US auto executives planned to meet with a top US lawmaker to lobby for urgent aid to survive a deepening global downturn that industry leader Toyota Motor Corp warned would drive its operating profit to a 13-year low.
Slowing demand and the sharp price drop prompted the Organization of Petroleum Exporting Countries to agree to cut output by 1.5 million barrels per day at an emergency meeting last month.
While market sources and members of the producer group say the reductions are already being made, Venezuelan Oil Minister Rafael Ramirez said on Thursday OPEC needed to reduce output by a further 1.0 million barrels per day.
OPEC seaborne oil exports, excluding Angola and Ecuador, will drop 310,000 bpd in the four weeks to Nov. 22 and will have fallen 700,000 bpd from an August supply peak, an oil analyst who tracks future flows said.
Although the oil market has been more strongly focused on weak demand than tight supplies, analysts have said OPEC's action would provide support at some point.
"The circuit breaker is OPEC," Mike Wittner of Societe Generale said, adding that eventually limited supplies would struggle to match demand.
"The long-term story still hasn't really changed," he said. "Lower prices encourage demand and discourage supply."
The International Energy Agency said on Thursday the world would have to live with the risk of an energy supply crunch and an oil price well above $100 a barrel in the years to come.
