LONDON (AFP) - Oil prices plunged to the lowest level for almost two months, sinking below 46 dollars in New York as winter supply fears receded and the Nigerian government moved to avert a strike threat.
New York`s main oil contract, light sweet crude for delivery in December, fell to as low as 45.60 dollars a barrel, the lowest level since September 20.
US crude oil futures were showing a loss of almost four percent from Friday`s close and about 18 percent in under a month.
At about 1630 GMT the US contract stood at 46.05 dollars, down 1.27 dollars on the day.
Brent North Sea crude for December delivery tumbled by 1.76 dollars to 40.55 dollars a barrel in London, the lowest level since September 15.
"All the attention is on Nigeria. We are waiting to find out if the Nigerians will go ahead with planned strikes, or if they will find the new proposal acceptable," said GNI-Man Financial trader Lee Elliott.
The Nigerian government made an 11th-hour bid to avert a general strike, ordering a temporary increase in fuel subsidies and an immediate cut in pump prices on the eve of a threatened nationwide protest.
The announced price-cut fell short of the sum demanded by labour unions and civil society groups, but labour leaders nevertheless said that they would meet later in the day to decide whether or not to halt the protest.
"I think it`s an improvement on where we were before. We will meet today and make a formal announcement," Peter Akpatasan, president of the blue-collar oil union NUPENG, told reporters in Abuja.
Previous strikes have not disrupted Nigeria`s daily output of some 2.5 million barrels.
Oil prices have fallen by almost 10 dollars a barrel from an all-time of 55.33 dollars seen in New York on October 18, as rising US crude oil stockpiles in the United States calm markets` fears of a winter supply crunch in the northern hemisphere.
"Oil prices are down, still following the trend of last week after the crude inventory build in the US," said Commerzbank analyst David Thomas.
"The fact that funds have been liquidating their long positions ... is a sign that people believe oil prices are going to be dropping," he added.
US government data released Wednesday showed that crude oil inventories had increased by 1.8 million barrels to 291.5 million in the week to November 5, helping to offset a further drop in stockpiles of heating oil.
This week`s snapshot of US commercial crude oil inventories, due to be released on Wednesday, would likely show another increase in stockpiles, analysts said.
"We are seeing good production volumes coming through and imports rising into the US, so crude inventories should continue rebuilding," said Thomas.
"The main issue remains the heating oil inventories being down again, but it seems that the crude market has pretty well ignored that for the time being."
Data last week showed that US heating oil inventories are 17 percent below 2003 levels, noted analysts at the Sucden brokerage firm.
"However a rebound in crude stocks in the US has brought oil prices down from their peaks thanks partly to the highest OPEC production in decades," they wrote in a note to clients.
Meanwhile in Iraq saboteurs blew up a section of an oil pipeline in the northern region of Kirkuk early Monday, while flames raged in four oil wells after a string of bombings the previous day, officials said.
The secondary pipeline carrying oil to refineries in the city of Baiji was bombed at around 3:00 am (0000 GMT) about 60 kilometres (37 miles) west of Kirkuk, said police officer Sahim Mohammed.
11/15/2004 - 17:13 GMT - AFP