PERTH -- Oil fell below $60 a barrel for the first time in 20 months on Friday, extending its overnight drop of 7.0 percent, as spreading economic gloom further dampened the outlook for energy demand.
The International Monetary Fund said on Thursday it now expects 2009 global economic growth of 2.2 percent, down 0.8 percentage points from its October forecast. It also cut its 2009 baseline oil price projection to $68 a barrel from $100.
US light crude for December delivery fell 44 cents to $60.33 a barrel by 0150 GMT, having earlier fallen to $59.97, its lowest since Mar. 22, 2007. London Brent Crude was down 73 cents to $56.70.
Oil prices have tumbled more than 10 percent this week as a series of dismal economic data from the United States sharpened investors' worries of a protracted global recession and growing US fuel stockpiles underscored thinning energy demand.
"The Bank of England and the European Central Bank may have cut rates, but fears that a deep international economic downturn would curb commodity demand continued to dominate market thinking," said David Moore, a senior commodities strategist at the Commonwealth Bank of Australia.
Britain and Europe slashed interest rates on Thursday amid recession fears deepened by some of the worst US retail sales in decades and an IMF forecast for an economic contraction not seen since World War Two.
Moves by top automaker Toyota to halve its profit forecast and expectations the US could report another 200,000 job losses on Friday also added to signs of distress.
Analysts said Asian stock markets' performance and dollar movements would be key to oil prices.
Fears of a global recession dragged down Asian stocks on Friday, with the Japan's Nikkei average tumbling 6.0 percent and Australia's S&P/ASX 200 Index shedding 4.0 percent in early trading.
Traders will also be looking towards US economic indicators due out later on Friday, including government reports on October unemployment data and September wholesale inventories, to gauge how the world's largest economy is faring.
In just about three months, oil prices lost nearly $90 from record highs above $147 a barrel, as the growing global economic crisis cuts energy demand in the United States, the world's largest energy consumer, and other industrialised nations.
Slowing demand and the sharp price drop drove producer cartel 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 one million barrels per day.
OPEC's 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.
