crude at 22-month low on demand concerns

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    NEW YORK (Dow Jones)--Crude oil tumbled to a 22-month low Wednesday, pummeled by relentless speculation that petroleum demand will stay weak.

    Light, sweet crude for December delivery settled at $56.16 a barrel, down $3.17, or 5.3%, on the New York Mercantile Exchange. Nymex crude last closed lower on Jan. 29, 2007.

    Brent crude on the ICE Futures exchange settled $3.34 lower at $52.37 a barrel.

    Crude extended earlier declines after the U.S. Energy Information Administration projected a negligible increase in world oil demand next year, adding its voice to a chorus of oil analysts who have slashed demand forecasts over the past month as prospects for the world economy grow more dire.

    In the U.S., retail gasoline consumption last week was down 4.2% from a year ago, marking the 29th straight week that purchases at the gasoline pump were below the levels of a year earlier, a unit of MasterCard Inc. reported.

    Oil's sell-off was complemented by gloomy sentiment in other markets. Stocks were down on bleak announcements from big retailers and changes in the Treasury Department's financial bailout plan, with the Dow Jones Industrial Average recently off more than 300 points.

    "With the global macro situation looking pretty lousy, we probably shouldn't be looking for a material rebound in oil prices until some time in 2009," said Bart Melek, global commodity strategist at BMO Capital Markets in Toronto.

    Nymex crude settled nearly $90 below its July 3 record close of $145.29. Lower prices have pressured national budgets in a number of key oil exporters, leading some members of the Organization of Petroleum Exporting Countries to suggest meeting ahead of a scheduled Dec. 17 gathering in Algeria. Last month OPEC agreed to curtail output by 1.5 million barrels a day, to 27.3 million barrels a day for the 11 members subject to quotas.

    OPEC is waiting to gauge whether the most recent output cut decision has been effective before it makes another decision on production, a person close to its president told Dow Jones Newswires Wednesday. The person also said participants at a scheduled Nov. 29 meeting of the Organization of Arab Petroleum Exporting Countries "will consult each other" over the market situation.

    A continued decline in prices could force OPEC's hand, some analysts said.

    "The lower these prices go, the greater the likelihood the cartel will call for an emergency meeting," said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 5.78 cents, or 4.4%, to $1.2481 a gallon, the lowest RBOB settlement since it was listed on the Nymex in 2005. December heating oil fell 9.36 cents, or 4.9%, to $1.8354 a gallon.

    Fresh glimpses of oil market balances are expected Thursday. The International Energy Agency is scheduled to release new oil supply and demand estimates in a monthly oil market report due early in the day.

    At 11 a.m. EST, the Energy Information Administration is set to release domestic oil data for the week ended Nov. 7. Analysts surveyed by Dow Jones Newswires expect U.S. crude stockpiles rose 1.3 million barrels, gasoline stocks rose 300,000 barrels and stocks of distillates, which include heating oil and diesel, rose 500,000 barrels in the week. The poll estimates refinery use rose 0.1 percentage point to 85.4% of capacity.

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