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2008-12-23 05:07:17
Oil prices have further extended their losses, due to growing signs of weakening demand from consumers and the global economic slowdown.
Share price falls on Wall Street and a record decline in Japanese exports have heightened economic worries.
US light, sweet crude for February delivery slipped 23 cents to $39.68 a barrel in Singapore, after falling 6% on Monday.
Brent crude oil fell 10 cents to $41.35 a barrel.
Among the latest government economic stimulus measures, China cut its interest rates on Monday for the fifth time in four months amid mounting anxiety about spreading job losses and worker protests.
Surging demand from China and other emerging nations had sent oil prices to record highs of $147 a barrel in July, before the economic crisis began to slow demand.
Now, however, even in China oil demand is falling, shrinking for the first time in three years in November.
Production cuts
In a bid to support oil prices, the producers' cartel, Opec, has said it would reduce production by about 5% of world supplies to counter the plunge in demand.
Last week Opec agreed to cut 2.2 million barrels a day of production, and the group has indicated it was ready to reduce supply further if needed.
However, oil traders have said they are most concerned for now with seeing evidence that Opec countries are implementing the cuts they have already agreed.
"The trend at the moment is still south," said Justin Wilks, of the fund managers Global Commodities.
"Any amount of production cuts will take a little time to come through, but just as with base metals it's all tied to economics at the moment," he said.
Later on Tuesday traders will be looking for confirmation the US economy contracted by 0.5% in the third quarter, in line with preliminary figures.
On Wednesday, weekly US oil inventory figures are expected to show that crude stocks rose by 300,000 barrels in the week to 19 December.
Meanwhile, energy ministers from gas exporting countries are meeting in Moscow amid suggestions that they want to set up an organisation similar to Opec.
The countries involved include Russia, Algeria, Iran, Libya, Qatar and Venezuela. Russia has said the main idea of the organisation is to exchange views.