Investors scurried to safe havens and global stock prices fell sharply as concerns over a potential global recession wiped away optimism seen earlier this week over governments’ steps to avert a financial meltdown.
U.S crude fell $ 3.00 a barrel to $ 75.63 by 1:55pm EDT (1755 GMT), after sliding to $ 74.57, the lowest since September 2007 and down nearly 50 percent since hitting a record over $ 147 in July.
London Brent crude traded down $ 2.92 to $ 71.61 a barrel.
European leaders pressed for an overhaul of global financial structures, building on trillion-dollar bank bailouts announced this week.
Federal Reserve Chairman Ben Bernanke said the United States needs to enhance regulatory oversight authorities to deal with asset bubbles, as occurred in the housing market, that cause economic problems when they burst.
US retailers suffered their biggest monthly drop in sales in more than three years in September, adding to concerns of a potential recession in the world’s top consumer.
Slumping demand in the United States and other developed economies, as well as a flight of investors from oil to safer havens, has sent oil tumbling from July’s record.
"The fall in crude futures prices today reflects movement in the stock market, which mirrors fears about a recession that will cut into demand for crude oil," said Joe Possillico, broker for MF Global in New York City.
Analysts have scaled back global demand growth estimates, with the Organization of the Petroleum Exporting Countries cutting its forecasts for world demand for crude next year in its latest monthly report.
"Even if governments are successful in calming equity markets and unfreezing credit markets in the near future, the fallout on the real economy from financial market headwinds is expected to be considerable," the producer group said. OPEC has set a November emergency meeting in Vienna to assess the global financial crisis’ effect on the oil market.
JP Morgan cut its average oil price forecast for 2009 to $ 74.75 a barrel, citing the weak economic outlook.
