PERTH - Oil fell more than $1 a barrel to its lowest in more than two weeks on Tuesday, extending a near 8 percent overnight loss, as investors grew more pessimistic about energy demand on signs the world economy will slow down sharply.
Worsening recessionary signs forced investors to flee risky assets such as commodities and take refuge in the safe haven of U.S. Treasury bonds on Monday, while Asian shares fell on concerns about the United States sinking further into recession.
U.S. light crude for February delivery fell $1.19 to $36.40 a barrel by 0715 GMT (2:15 a.m. EST), the weakest level since December 26. London Brent crude fell 81 cents to $42.10.
"It's generally a very negative tone out there and there is a lot of pessimism on oil demand in the near term," Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.
Slumping fuel demand due to the global recession sent oil prices down 54 percent last year, and crude is now off more than $100 from its record peak above $147 a barrel last July.
Top central bankers said on Monday the global economy will slow down sharply in 2009 as industrialized economies contracted, while latest data from the Organization for Economic Cooperation and Development (OECD) showed that the world's major and emerging economies were heading toward a "deep slowdown."
Poor trade figures from China, the No. 2 energy consumer, added to the gloom.
Latest government data showed China's exports and imports fell in December for the second month in a row, underlining how badly the global financial crisis was sapping the strength of the world's fourth-largest economy.
Analysts said the resumption of Russian gas supplies to Europe, a key factor which has helped oil's rally at the start of the year, was dampening crude oil's rise.
Russian Prime Minister Vladimir Putin ordered the resumption of gas supplies via Ukraine to Europe on Tuesday after signing a deal with Kiev on monitoring gas flows, six days after a Russian-Ukrainian price row cut deliveries in freezing temperatures.
A rally by the dollar against the euro also put pressure on oil prices, analysts said. The U.S. dollar extended gains to reach a one-month high versus the euro, amid expectations the European Central Bank will cut interest rates this week.
Oil prices are falling despite news that OPEC members may cut production further and that heating oil demand in top consumer the United States will climb above average this week due to cold weather.
In another sign that energy consumption in United States had slumped, a preliminary Reuters poll ahead of Wednesday's U.S. government inventory data forecast crude stocks to rise for the third consecutive time by 2.2 million barrels last week, with stocks of refined product also increasing.
Worsening recessionary signs forced investors to flee risky assets such as commodities and take refuge in the safe haven of U.S. Treasury bonds on Monday, while Asian shares fell on concerns about the United States sinking further into recession.
U.S. light crude for February delivery fell $1.19 to $36.40 a barrel by 0715 GMT (2:15 a.m. EST), the weakest level since December 26. London Brent crude fell 81 cents to $42.10.
"It's generally a very negative tone out there and there is a lot of pessimism on oil demand in the near term," Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.
Slumping fuel demand due to the global recession sent oil prices down 54 percent last year, and crude is now off more than $100 from its record peak above $147 a barrel last July.
Top central bankers said on Monday the global economy will slow down sharply in 2009 as industrialized economies contracted, while latest data from the Organization for Economic Cooperation and Development (OECD) showed that the world's major and emerging economies were heading toward a "deep slowdown."
Poor trade figures from China, the No. 2 energy consumer, added to the gloom.
Latest government data showed China's exports and imports fell in December for the second month in a row, underlining how badly the global financial crisis was sapping the strength of the world's fourth-largest economy.
Analysts said the resumption of Russian gas supplies to Europe, a key factor which has helped oil's rally at the start of the year, was dampening crude oil's rise.
Russian Prime Minister Vladimir Putin ordered the resumption of gas supplies via Ukraine to Europe on Tuesday after signing a deal with Kiev on monitoring gas flows, six days after a Russian-Ukrainian price row cut deliveries in freezing temperatures.
A rally by the dollar against the euro also put pressure on oil prices, analysts said. The U.S. dollar extended gains to reach a one-month high versus the euro, amid expectations the European Central Bank will cut interest rates this week.
Oil prices are falling despite news that OPEC members may cut production further and that heating oil demand in top consumer the United States will climb above average this week due to cold weather.
In another sign that energy consumption in United States had slumped, a preliminary Reuters poll ahead of Wednesday's U.S. government inventory data forecast crude stocks to rise for the third consecutive time by 2.2 million barrels last week, with stocks of refined product also increasing.
