World oil prices tumble on US economic gloom

LONDON, October 30, 2008 (AFP) – Oil prices slipped back on Thursday in volatile trade, reversing early gains as the market reacted to news of shrinking economic growth in the United States, the world’s top energy consumer.

An overnight cut in US interest rates, along with a similar move in China, had earlier bolstered prices on the view this action would bolster demand in two crucial markets.

New York’s main contract, light sweet crude for December delivery was down 2.04 dollars to 65.46 dollars per barrel.

London’s Brent North Sea crude for December lost 2.21 dollars to 63.26 dollars.

The US economy contracted at a 0.3 percent pace in the third quarter as a global credit crunch saw consumers and businesses cut back on spending.

The decline, not as steep as the 0.5 percent annualized drop expected by private economists, comes amid mounting expectations of a sharp falloff in the US economy amid the worst banking and financial crisis in decades.

The news rang alarm bells in the oil market because the United States is the world’s biggest energy consumer, followed by number two China.

“The modest contraction in activity in the third quarter marks the real start of what is likely to be a deep