Oil prices slide on demand concerns

Updated at: 0330 PST, Wednesday, October 22, 2008
NEW YORK: World oil prices fell sharply Tuesday, with investors shrugging off the possibility of a new OPEC output cut as they focus on slowing global demand.

New York's main contract, light sweet crude for delivery in November, tumbled 3.36 dollars to close at 70.89 dollars per barrel. The contract expired at the close.

In London, Brent North Sea crude for December delivery fell 2.31 dollars to settle at 69.72 dollars a barrel.

Oil prices had rebounded more than four dollars over the past two sessions on market expectations that the Organization of the Petroleum Exporting Countries would announce an output cut at their special meeting Friday in Vienna.

But prices have since given back most of those gains "as participants react to what appears to be resistance to slashing production by the Saudis," said John Kilduff, analyst at MF Global.

Unlike some other OPEC members who have called for a production cut in the face of declining oil prices, Saudi Arabia, the largest oil producer, has not made its position known.

"Apparently, they are fearful of a spiral of lower prices followed by more cuts," Kilduff said.

Algerian Energy Minister and current OPEC chief Chakib Khelil said over the weekend that the cartel should order a "substantial" cut in production.

Crude futures have halved in value from record highs above 147 dollars in July.

Crude prices slumped under 70 dollars last week for the first time in more than a year, dragged down by prospects of reduced demand in the face of a global economic slowdown stemming from the ongoing world financial crisis.