Oil prices sank below $35 a barrel this evening after OPEC crude producers trimmed their demand forecasts for 2009 because of the global economic downturn.
US crude tumbled $2.40 to $34.88, while Brent North Sea crude was down 51 cents at $44.57. Prices had climbed in earlier trading, but moved lower after OPEC cut its forecasts for global oil demand, predicting that demand would fall by a bigger than expected 0.2% this year.
'The depressed world economy is expected to have a large impact on oil demand this year,' the organisation wrote in its latest monthly report.
Since September, OPEC has cut output by a total of 4.2 million barrels per day to try to combat falling crude prices. OPEC's decision last month to cut oil output by 2.2 million bpd has helped stem the slide in prices, the cartel said.
But it added that 'achieving an acceptable level of stability will take time given the ongoing challenges facing the global economy'. In 2008, global oil demand was estimated to have contracted by 100,000 bpd, the first decline in two decades.
