* Oil falls to lowest in a year
* IEA cuts 2008, 2009 world demand growth forecasts
* OPEC to hold emergency meeting on Nov. 18
(Adds quote, updates prices)
LONDON, Oct 10 (Reuters) - Oil fell more than $7 on Friday,
dropping below $80 a barrel for the first time in a year,
pressured by expectations fuel demand growth will shrivel if the
credit crisis pushes the world economy into recession.
Economic weakness spurred the International Energy Agency
(IEA) to cut its forecasts for world oil demand growth for 2008
to its lowest rate since 1993. []
U.S. light crude for November delivery <CLc1> was down $6.74
at $79.85 a barrel by 13.35 GMT. It touched a session low of
$78.61, its lowest since October 2007.
Prices have dropped nearly 45 percent from a peak of $147.27
in July.
London Brent crude <LCOc1> was down $6.17 a barrel at
$76.49, also below $80 for the first time in a year.
The IEA, which advises 28 industrialised nations, cut its
world demand growth forecast for 2008 to 0.5 percent -- the
lowest in percentage terms since 1993.
The agency said the impact of global economic weakness was
most acute in developed countries, while developing countries
were showing "a degree of resilience."
Commodities have tumbled this week along with global stock
markets, which suffered heavy losses in Asia, with the Nikkei
index <> down nearly 10 percent. [] European
shares were down about 9 percent. <>
The Dow Jones industrial average was down about 7 percent
shortly after trading opened. <>
FLIGHT TO SAFETY
Investors, who earlier this year piled into oil and other
commodities as a hedge against inflation and the weak dollar,
now want safety.
"Commodity indices suffered heavy losses over the past week
as market sentiment continue to focus on the potential
demand-side weakness associated with the ongoing instability in
the financial sector," Barclays Capital said in a note.
A key question is how far will prices fall.
"We find oil prices would need to fall to $35 a barrel in
order to bring prices in real terms back to their long run
historical averages," Deutsche Bank said in a note.
But it also said that, given the geographical location of
marginal demand and supply, $60 a barrel was a more realistic
characterisation of "cheap" oil.
Gold, a traditional safe haven, jumped more than 2 percent
on Friday to a 2-1/2 month high of $931 an ounce. <XAU=>
Investors will this weekend look to Washington, where
finance ministers and central bankers from the Group of Seven
nations will meet to look for ways to contain the crisis.
[]
The Organization of the Petroleum Exporting Countries has
called an emergency meeting in Vienna on Nov. 18 to discuss the
impact of the global financial crisis on the oil market.
"OPEC appears to be scrambling to put in another, firmer
floor at $80," said Jonathan Kornafel, Asia director of U.S.
based options trader Hudson Capital Energy.
"The market may still overshoot on the downside regardless
of what OPEC does, as financial flows continue to pour out of
commodities," he added.
(Reporting by Jane Merriman in London and Annika Breidthardt in
Singapore; editing by James Jukwey)
