Oil Prices Slide on Weak Demand Fears
World oil prices sank Thursday, in line with plunging global stock markets, with weak energy demand further threatened by a possible return to recession.
New York's main contract, West Texas Intermediate light sweet crude for delivery in September, shed $1.39 to $86.19 a barrel.
Brent North Sea crude for October delivery dropped $1.14 to $109.46 a barrel approaching midday in London.
"The oil market is under pressure on Thursday, tracking heavy losses in the global equity markets," said analyst Myrto Sokou at the Sucden brokerage in London.
She added that crude futures were being hit by data Wednesday showing an abundance of crude stockpiles in top consumer the United States, already a sign of weak energy demand in the world's biggest oil consumer.
"In addition, the large build in crude oil stocks... weighed on market sentiment and prompted investors to a sell-off amid ongoing concerns about slowing demand in the medium-term," Sokou said.
European stock markets slumped on Thursday amid heightened concerns of a new global economic slowdown.
Investment bank Morgan Stanley sparked fresh fears after warning that the United States and the Eurozone region, beset with debt crises, were flirting with recession.
"Our revised forecasts show the U.S. and the euro area hovering dangerously close to recession," Morgan Stanley said in a new report which cut its forecasts for global economic growth.
Later on Thursday, the U.S. government is expected to release figures on jobless claims and inflation in the world's biggest economy, which is struggling to avoid dipping back into recession.
Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore, said oil prices were lower also "in parallel with the strengthening of the U.S. dollar against the euro".