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Oil Fell to 22-month low of US$55 a barrel

Oil fell for a third straight day on Thursday to hit a 22-month low of US$55 a barrel as mounting pessimism about the global economy outweighed Opec's comments that it could cut output again as early as end-November.

Opec officials, concerned about oil's steep drop from record highs over US$147 a barrel per day (bpd) in July, said the cartel could possibly decide by the end of the month to cut production again to raise prices.

But comments from the producer group failed to lift oil prices, as investors focused on near-term demand worries after the US Energy Information Administration (EIA) slashed America's 2008 oil demand outlook and the International Energy Agency (IEA) flagged further reduction in its oil forecast.

US light crude for December delivery was down 95 cents at US$55.21 a barrel by 0702 GMT, after having fallen earlier to US$54.67 - the lowest since Jan 30, 2007.

London Brent crude fell $1.02 to US$51.35, off an earlier low of US$50.60.

'Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption,' said David Moore, an analyst at the Commonwealth Bank of Australia.

Oil fell 5 per cent overnight, along with a big drop in US stock markets, after the US government shifted its position on how it planned to use its US$700 billion bailout fund, which added uncertainty to financial markets and renewed fears of a protracted global recession.

Expectations that US government data to be released on Thursday would show a further build-up of crude and petrol stocks also weighed on prices, analysts said.