Oil prices tumbled Tuesday along with equities markets as investors worried about weakening energy demand in a stalling global economy.
New York's main futures contract, light sweet crude for delivery in March, sank to 34.93 dollars a barrel, down 2.58 dollars from its close Friday.
Floor trading on the New York Mercantile Exchange was closed Monday for a public holiday.
In London, Brent North Sea crude for April delivery slid 2.25 dollars to settle at 41.03 dollars a barrel.
"We continue to have concerns over demand -- economic conditions seem to be worsening," said Bart Melek, an analyst at BMO Capital Markets.
"There is a combination of poor expectations of economic growth and concerns about demand prospects and ultimately the market is realizing that even if OPEC cuts supply, it will take quite a bit of time to unwind inventories and balance the market," he said.
John Kilduff at MF Global agreed the bears were winning.
"The current divide in the market falls between those who conclude that economic deterioration will continue causing energy demand to contract and prices to retreat, and those who think that this effect has largely been priced in and selling overdone," said
"As prices approach recent lows, the majority has clearly shifted to the former school of thought. Certainly, the evidence appears to be mounting to support that thinking," he said.
Traders also took their cue from sinking stock markets amid fears for the health of the banking and automobile sectors, and doubts about the effectiveness of a US economic stimulus package and plan to stabilize the weak financial system.
The price differential between New York crude and Brent oil hit a record of more than 11 dollars last week, which analysts attributed to soaring energy stockpiles in the United States.
"Oil markets are likely to remain vulnerable to further losses with risk aversion on the rise and as bulls lose hope for a swift recovery in global economies following an array of negative economic data recently," said Sucden Financial analyst Nimit Khamar.
Last Friday, the OPEC oil producers cartel trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 percent in 2009 because of "economic depression" in industrialized countries.
"Oil supplies are still surging and the demand outlook is worsening. Asian stock markets looked lousy over the weekend as did Europe," said Phil Flynn at Alaron Trading.
The analyst highlighted more reports of slowing global oil demand from the Organization of the Petroleum Exporting Countries and private forecasters.
"That means OPEC will have to try to reduce production by at least two million more barrels a day to keep current and even that might not stop oil supplies from rising," Flynn said.
New York's main futures contract, light sweet crude for delivery in March, sank to 34.93 dollars a barrel, down 2.58 dollars from its close Friday.
Floor trading on the New York Mercantile Exchange was closed Monday for a public holiday.
In London, Brent North Sea crude for April delivery slid 2.25 dollars to settle at 41.03 dollars a barrel.
"We continue to have concerns over demand -- economic conditions seem to be worsening," said Bart Melek, an analyst at BMO Capital Markets.
"There is a combination of poor expectations of economic growth and concerns about demand prospects and ultimately the market is realizing that even if OPEC cuts supply, it will take quite a bit of time to unwind inventories and balance the market," he said.
John Kilduff at MF Global agreed the bears were winning.
"The current divide in the market falls between those who conclude that economic deterioration will continue causing energy demand to contract and prices to retreat, and those who think that this effect has largely been priced in and selling overdone," said
"As prices approach recent lows, the majority has clearly shifted to the former school of thought. Certainly, the evidence appears to be mounting to support that thinking," he said.
Traders also took their cue from sinking stock markets amid fears for the health of the banking and automobile sectors, and doubts about the effectiveness of a US economic stimulus package and plan to stabilize the weak financial system.
The price differential between New York crude and Brent oil hit a record of more than 11 dollars last week, which analysts attributed to soaring energy stockpiles in the United States.
"Oil markets are likely to remain vulnerable to further losses with risk aversion on the rise and as bulls lose hope for a swift recovery in global economies following an array of negative economic data recently," said Sucden Financial analyst Nimit Khamar.
Last Friday, the OPEC oil producers cartel trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 percent in 2009 because of "economic depression" in industrialized countries.
"Oil supplies are still surging and the demand outlook is worsening. Asian stock markets looked lousy over the weekend as did Europe," said Phil Flynn at Alaron Trading.
The analyst highlighted more reports of slowing global oil demand from the Organization of the Petroleum Exporting Countries and private forecasters.
"That means OPEC will have to try to reduce production by at least two million more barrels a day to keep current and even that might not stop oil supplies from rising," Flynn said.
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