Oil falls below $38

Oil prices fell more than seven per cent yesterday, dragged down by growing evidence that economic recession is reducing global energy consumption.

The decline came as Russia and Ukraine signed a deal to help secure the resumption of Russian gas supplies to Europe, cut off for nearly a week in freezing temperatures.

US light crude for February delivery was trading at $37.89 a barrel, down $2.94, by noon EST (1700 GMT). US jobless data on Friday set the tone for the market. A US government report showed employers slashed jobs by 524,000 in December, driving the national unemployment rate to its highest level in almost 16 years.

Oil prices fell 54 per cent last year and have shed more than $100 from a record peak above $147 a barrel in July as the global economic downturn hits demand for fuel.

Meanwhile The Financial Times Ltd is to cut about 80 jobs, or five per cent of its workforce, as part of a restructuring exercise driven by a move to online publishing and a global recession.

The FT, owned by Pearson and seen as a valuable source of financial intelligence, has so far escaped the worst effects of an advertising downturn that has forced many of its competitors to close titles and slash jobs.

Last week, Canada's Globe and Mail said it would cut about 10 per cent of its workforce.