Oil sinks to 21-month low on global demand estimate

NEW YORK - Crude oil fell to a 21-month low on speculation the International Energy Agency will cut its global demand estimate today and the United States will report that stockpiles gained.

The IEA is "more than likely" to lower its oil demand forecast for next year in its next monthly oil report, according to executive director Nobuo Tanaka.

The Energy Department cut its oil demand and price forecasts yesterday. A department report today may show that crude oil supplies rose last week.

"It's hard to see what will stop this slide," said Tom Bentz, senior energy analyst at BNP Paribas in New York. "It's more of the same. The market is moving on continuing economic concerns."

Crude oil for December delivery fell $3.17, or 5.3 percent, to $56.16 a barrel on the New York Mercantile Exchange, the lowest settlement since Jan. 29, 2007. Prices have tumbled 62 percent since they reached a record $147.27 on July 11.

Futures in after-hours electronic trading declined $3.71 a barrel, or 6.3 percent, to $55.62 a barrel.

The IEA, which coordinates energy policy in 28 developed countries, will cut its forecast for growth in global demand for a third month from 700,000 barrels a day in its monthly report today, according to four former analysts at the agency.

The US government reduced its forecast for oil prices next year by 43 percent as the nation's economic slowdown cuts energy demand.

West Texas Intermediate crude oil, the US benchmark, will average $63.50 a barrel in 2009, down from $112 estimated in October, the Energy Department said in its monthly Short-Term Energy Outlook, released yesterday in Washington.

The Organization of Petroleum Exporting Countries, which disclosed a 1.5 million barrel-a-day supply cut last month to stanch the price drop, may meet again before its next scheduled gathering in December if futures keep declining, Shokri Ghanem, Libya's top oil official, said.

OPEC oil ministers and officials are holding talks by telephone, he said.

OPEC president Chakib Khelil said the group may further cut output before its next planned meeting, Reuters reported. Members of the group produce more than 40 percent of the world's oil.