Oil fell more than $2 a barrel to below $43 on Monday as a deteriorating world economy threatened to cut further into fuel consumption and made OPEC’s tight compliance with supply curbs look insufficient.
Economic woes were also battering financial markets,with stocks falling close to a six-year low.
US crude fell $2.39 to $42.37 by 1140 GMT.
London Brent crude fell $2 to $44.35 a barrel.
Deepening recession has dented demand for oil worldwide and knocked more than $100 off the price of crude since July,prompting OPEC to pledge cuts totaling 4.2 million barrels per day (bpd) since September.
A Reuters survey showed the group enforced 81 per cent of the curbs last month. But even relatively strict adherence to the supply pact has failed to shore up prices.
“The reason why better OPEC quota compliance is necessary is that yet again the economic goalposts are moving,and yet again in the wrong direction,” said KBC Market Services. It estimates compliance at about 70 per cent.
Oil is being undermined by persistent worries about the US economy. Data on Friday showed it shrank by 6.2 per cent in the fourth quarter from a year ago,the deepest slide since 1982.
“Economic pessimism and weak equities are dragging us lower today,” said Christopher Bellew,oil broker at Bache Commodities in London.
Conflicting signals from some OPEC members on whether the group would reduce output at its March 15 meeting encouraged the sell-off.
Algerian Energy and Mines Minister Chakib Khelil said it was quite possible OPEC would cut oil output at its next meeting scheduled for March 15.
But Iran’s Oil Minister Gholamhossein Nozari said he did not expect OPEC to cut output again because an 80 per cent commitment by the group to recent curbs had helped stem price falls,Iranian media reported on Sunday.
The market was awaiting key data on Monday,including US personal income and consumption and construction spending for January as well as the US February ISM manufacturing index.