LONDON, Oct 27: Oil prices sank to $59 on Monday, hitting 17-month lows on worries that a global recession will sap energy demand and as the US currency strengthened against the euro.

In early Monday trade, Brent North Sea crude for December delivery plummeted to $59.02 per barrel, its lowest point since February 2007.

New York’s main contract, light sweet crude for December delivery, tumbled to $61.30 a barrel, a level last seen in May 2007.

“Crude prices have continued to slide as global recessionary concerns intensified after dramatic falls in Asian financial markets which saw Tokyo’s Nikkei index fall to its lowest level since 1982,” said Sucden analyst Nimit Khamar.

Oil prices fell below $60 a barrel to a 17-month low as market participants fear oil demand will suffer amid a global recession.

“Prices are more or less tracking the movements of global equity markets at the moment as participants view the indices as a gauge for economic conditions and an indicator for future oil demand.”

The market extended last week’s heavy losses to plunge underneath the psychological 60-dollar barrier in London for the first time since March 2007.

Crude prices have slumped since striking record high points above $147 in July.

Later Monday, Brent oil stood at $60.45, down $1.60 from Friday’s close. New York crude dropped $1.27 to stand at $62.88.

The Organisation of the Petroleum Exporting Countries (Opec), in a bid to shore up falling prices, announced on Friday that it would cut output by 1.5 million barrels per day to 27.3 million bpd starting in November.

However, the market has continued to fall, with Opec’s decision to cut supply at a time of global financial turmoil seen as hurting already weak energy demand, dealers said.

The market has also been weighed down by the strengthening dollar, which makes dollar-priced crude more expensive for buyers holding weaker currencies and therefore tends to dampen demand.

The euro sank under $1.24 in early London trading on Monday, hitting the lowest point for more than two years on fears of recession and the withdrawal of funds into the dollar, dealers said.

Analysts warned that oil prices could fall further if the dollar continues to strengthen.

“Further downward pressure may come from a strong dollar and further falls in equity markets,” said analysts at energy consultancy John Hall Associates.

—AFP