Crude Could Tumble Below $40 By the End of the Year

"You could see prices testing $40 by the end of the year because the economic data is really ugly at the moment," said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. "Demand destruction is still very much the concern."

The Organization of Petroleum Exporting Countries has signaled it plans to lower output quotas at a Dec. 17 meeting, adding to a production cut of 1.5 million barrels a day in October.

Analysts are skeptical that an output reduction by OPEC can reverse the fall in the prices.

"I don't think it will have a major impact in the near term," Moltke-Leth said. "However, low prices will increasingly lead drilling and exploration projects to be postponed or canceled, so supply will become a concern in the medium term."

Light, sweet crude for January delivery was down $1.19 cents to $45.60 a barrel - the lowest since closing at $45.42 on Feb. 10, 2005 - in electronic trading on the New York Mercantile Exchange by mid-afternoon in Singapore. The contract fell 17 cents overnight to settle at $46.79.

In other Nymex trading, gasoline futures fell 3.15 cents to $1.01 a gallon. Heating oil dropped 2.45 cents to $1.56 a gallon while natural gas for January delivery was steady at 6.35 per 1,000 cubic feet.

In London, January Brent crude fell $1.39 to $44.05 on the ICE Futures exchange.

Author: Ksenia Kochneva