Oil slid more than $1 a barrel to below $91 on Wednesday to the lowest in almost a month, pressured by further signs that slowing US economic growth will erode fuel demand.
The International Energy Agency, adviser to industrialised countries, on Wednesday cut its 2008 global demand growth forecast by 130,000 barrels per day to 1.98 million bpd and said it may lower the figure further.
US crude was down $1.15 at $90.75 barrel by 1138 GMT and fell as far as $90.60, the lowest since Dec. 20. London Brent crude was down 78 cents to $90.20.
Brent briefly fell below $90 for the first time since mid-December.
Mike Wittner, global head of oil research at Societe Generale, said fears over the world economy and relatively confortable oil supply were likely to keep the downward pressure on oil prices. "We have seen some negative studies on the macro economic front, and the IEA report this morning is moderately bearish," Wittner said.
"Looking forward, I think prices are going to fall further. Essentially, the market seems to be balanced in the first quarter this year."
Oil in New York has slid from an all-time peak of $100.09 hit earlier this month as concern of a US economic slowdown outweighs tightening stockpiles in major consumer nations.
While lowering its demand forecast, the Paris-based IEA pointed to a further decline in stocks in member-countries of the Organisation for Economic Co-operation and Development.
"The oil market has tightened. There's no doubt about that," said Lawrence Eagles, head of the IEA's Oil Industry and Markets division. "In terms of forward cover, we're at the lowest since November 2003."
Even so, weekly data on US inventories due later on today is expected to show crude inventories rose last week for the first time in nine weeks.
US President George W. Bush, ending a Middle East tour, has urged Saudi Arabia, the world's top oil exporter and the most influential OPEC member, to help tame soaring crude prices.
OPEC Secretary-General Abdullah al-Badri reiterated on Wednesday that the group was ready to raise supply if justified by fundamentals, but that he did not consider world oil inventories to be low.
But OPEC-member Iran, at odds with the United States, saw no need to increase oil production after the recent drop in prices, its oil minister Gholamhossein Nozari was quoted as saying by the state broadcaster.