Crude oil at record low since 2005

Oil prices tumbled to their weakest levels in nearly four years Thursday as investors fixated on mounting signs of recession in the global economy.

On the New York Mercantile Exchange, light, sweet crude for January delivery settled at 43.67 dollars a barrel, down 3.12 dollars from Wednesday's close. It was the lowest crude price since January 2005.

In London, Brent North Sea crude for delivery in January fell 3.16 dollars to settle at 42.28 dollars on the InterContinental Exchange, also at the lowest since January 2005.

In intraday trade the New York contract fell as low as 43.51 dollars and the London contract dropped to 42.04.

Oil prices have lost more than two-thirds of their value since striking record highs above 147 dollars on July 11.

"Fears of a prolonged global recession continued to weigh on sentiment," said Sucden analyst Nimit Khamar in London.

Investors worried about an increasingly marked decline in demand among the industrialized countries, and a slowdown in emerging countries like China.

Dismal economic data piling up in Europe and the United States was signaling the global downturn may be deep and prolonged.

Adding to the gloom, the European Central Bank on Thursday forecast the 15-nation eurozone would be in recession next year, contracting up to 1.0 percent, after predicting only last September 1.2 percent growth in 2009.

Wall Street bank Merrill Lynch forecast crude oil could fall to 30 dollars a barrel in New York if China sinks into the global recession and OPEC fails to cut back production to meet slowing demand.

"A temporary drop to this (30-dollar) level would be technically possible if the global recession extends to China and OPEC fails to cut output sufficiently," Merrill Lynch said in a 2009 energy market outlook report published Thursday.

"With demand vanishing across all key oil-consuming regions, a strong rebound in prices ... is unlikely" in the first half of 2009, Merrill analysts said, forecasting an average 2009 price of 50 dollars a barrel.

The jittery market shrugged off sharp interest rate cuts by four central banks in Europe, including the European Central Bank and Bank of England, aimed at reversing the economic downturn, dealers said.

"The scale of the correction so far would indicate further pain to the downside," Simon Denham of Capital Spreads said.

In the United States, the world's largest economy, telecommunications giant AT&T and other major US companies unleashed a new wave of layoffs amid a deepening recession that saw government unemployment aid swell to a 26-year high.

A US Labor Department weekly report put unemployment insurance claims at a 26-year high, an ominous figure ahead of a key November nonfarm payrolls and unemployment report due Friday, expected to show the loss of 325,000 jobs.

Oil prices began the week sharply lower after the Organization of the Petroleum Exporting Countries (OPEC) decided at a weekend meeting against cutting production and put off any decision until a December 17 meeting.

OPEC president Chakib Khelil said Wednesday there was no "floor" for the price of oil.