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Brent oil price near $60 a barrel Oil prices up on export cut talks
(about 4 hours later)
The price of Brent crude fell to its lowest level in more than 20 months amid concerns about the US economy, before later edging back up. The price of Brent crude has risen from its earlier 20-month low after reports suggested Saudi Arabia had already cut production to support world prices.
Brent crude fell as low as $58.38 a barrel before rising back up to $61.10 a barrel by late morning in London. Brent crude rose $4.10 to $64.58 a barrel after falling as low as $58.38 during the session in London.
US sweet crude oil traded at $64.86 per barrel, having dipped as low as $62.25. US light, sweet crude hit $68.40 a barrel, having dipped as low as $62.25.
Oil prices have slumped since hitting a record of $147 a barrel in July, as consumers have cut their spending and the chances of a global recession grow. Reports said Saudi Arabia had reduced its exports of oil by 900,000 barrels a day from their peak in August, with other oil producers following suit.
Members of oil cartel Opec have decided to cut output to boost prices. Saudi Arabia is the biggest oil exporter in the world.
"The overriding concern is the economy in the US," said Victor Shum, energy analyst at consultancy Purvin & Gertz. Tim Evans at City Futures Perspective says the market is driven now by "a trio of supportive factors; a weaker US dollar, a push to the upside in global equity markets and market talk that Saudi Arabia may have already cut crude oil production."
Credit Suisse has cut its forecast for China's energy demand, predicting that it will remain unchanged in 2009. Members of the Opec oil producers' cartel agreed in October to cut crude supplies by 1.5m barrels a day to boost prices, but investors had been waiting to see when the cuts would be implemented.
Growth worries
Earlier on Tuesday Brent crude fell to its lowest level since February 2007 amid concerns about the state of the US economy.
Oil prices have slumped since hitting a record of $147 a barrel in July, as consumers have cut their spending and the chances of a global recession have grown.
Credit Suisse has also cut its forecast for China's energy demand, predicting that it will remain unchanged in 2009.
Recent figures showed China's economic growth rate fell for the third quarter in a row, prompting fears of a wider downturn.Recent figures showed China's economic growth rate fell for the third quarter in a row, prompting fears of a wider downturn.
Growth slowed to an annual pace of 9% in the three months to September - down from 10.1% over the previous quarter.Growth slowed to an annual pace of 9% in the three months to September - down from 10.1% over the previous quarter.
There had been hopes that growth in developing nations such as China and India would help offset the slump in demand in US.There had been hopes that growth in developing nations such as China and India would help offset the slump in demand in US.
On Monday, poor US economic data underlined the degree of the slowdown in the world's largest economy.
The Institute for Supply Management said its manufacturing index dropped to 38.9 in October - its worst reading for 26 years. Any reading under 50 indicates contraction.