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Oil sinks to four-year low below US$83 as economic worries mount

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Oil fell more than USUS$1 a barrel on Thursday to a four-year low below US$83 a barrel as growing concerns over the global economy stretched a four-month rout - PHOTO: AFP

[London] Oil fell more than USUS$1 a barrel on Thursday to a four-year low below US$83 a barrel as growing concerns over the global economy stretched a four-month rout.

Global benchmark Brent has lost more than 28 per cent since June on slow demand and abundant supply. Losses have accelerated in October on signals that the Organization of the Petroleum Exporting Countries has no plan to cut output.

Brent crude for November delivery had dropped to US$82.72 a barrel, the lowest since November 2010 and was down 62 cents at US$83.16 a barrel by 0914 GMT. US crude fell US$1.01 to US$80.77 a barrel. "The market still seems very bearish," said Eugen Weinberg, analyst at Commerbank in Frankfurt. "And despite us seeing a floor around US$80, even this floor might come into danger if we don't have any signal from OPEC any time soon." Assets which depend on economic growth, such as shares and oil, have been hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil face their own hardships.

At the same time, the US Federal Reserve is set to wind down later this month the asset purchase programme that has boosted markets over the past two years.

Brent has fallen from a high of US$115.71 reached in June - a level reached on concern that Islamic State's insurgency into Iraq would disrupt its supplies, and well below the US$100-mark until recently seen as a level OPEC members would defend. "The US$30 fall since June has led to an intense discussion whether prices could be in for a new norm," said analysts at JBC Energy in a report, which sees OPEC cutting some output in the firs half of 2015 to support prices. "We see rather a deep slump than a permanent shift of - or a new norm for - oil prices. After all we are really in a hyped downward spiral, where any bear item is overly emphasized." Global economic worries deepened this week after China's consumer inflation fell to near five-year lows and US producer prices declined for the first time in more than a year. The International Energy Agency also cut its global oil demand growth forecast for 2015.

Venezuela has called for an emergency meeting of OPEC - ahead of its next scheduled gathering on Nov 27. OPEC has yet to respond officially to the request, athough OPEC sources have said such a meeting is unlikely.

Reports of ample supplies in the United States added downward pressure on prices. According to industry group the American Petroleum Institute, US crude inventories rose 10.2 million barrels to 370.7 million barrels.

Traders will be looking to the government's weekly supply report due later on Thursday for confirmation of the increase, whoch was higher than analysts' expectations for a build of 2.8 million barrels. REUTERS