Oil falls over $2, recession looms

Oil fell for a third straight session Thursday, hitting a 13-month low near $71, as investors braced for a plunge in demand and economies teetered on the brink of recession.

Oil’s decline echoed global stock markets which dropped on Thursday. European stocks fell after Wall Street and Japan’s Nikkei both suffered their worst one-day losses since the stock market crash of 1987.

U.S. crude for November delivery was $2.33, or 3.1 percent, down at $72.21 a barrel at 4:50 a.m. EDT. The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983.

London Brent crude fell $2.80 to $68.

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“Economic weakness is hitting the stock and oil markets, but the oil price fall is also reflecting a lack of demand. It is very difficult to buy oil if you are having a hard time getting credit lined up,” said Francisco Blanch, head of commodity research at Merrill Lynch.

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Crude has fallen by more than 50 percent from its July peak above $147.

Analysts have scaled back global demand growth estimates after a slew of gloomy data that has had a bigger market impact than OPEC talk of possible production cuts and a hurricane that has disrupted Caribbean refining operations.

Joining a series of analysts in sharply chopping back forecasts, Bernstein Research cut its 2009 oil price view to $70 a barrel from $90 a barrel, while lowering its 2010 oil estimate to $80 from $95.