The price of New York crude fell below $80 a barrel today, hitting a one-year low, as the market was rattled by plunging stock markets and fears of slowing demand.
This evening, US crude was trading at $79.96 a barrel, down $6.63.
Brent North Sea crude for November plummeted as low as $75 which was last witnessed on October 12, 2007. It was later $6.10 down at $76.56.
Meanwhile, the International Energy Agency today cut its oil demand growth forecast for 2008 to the lowest rate in 15 years, citing economic weakness and 'a spiralling liquidity crisis.'
In a monthly report, the agency, adviser to 28 industrialised countries, reduced its 2008 demand growth forecast by 250,000 barrels a day to 440,000. This represents a 0.5% growth rate - the lowest in percentage terms since 1993.
The report adds to evidence that slowing economies and the worsening financial crisis are reducing oil consumption.
The IEA cautioned against too much focus on demand, saying the credit crisis would also impact investment in bringing on new oil supply.
Already, world output fell by more than 1 million bpd in September partly because of storm disruption in the US Gulf, it said.
