LONDON: Crude prices fell below $44 a barrel on Friday, after the collapse of a $14 billion rescue plan for US automakers caused heavy losses acro ss global financial markets and Goldman Sachs predicted oil could drop to $30 a barrel. US light crude oil for January delivery was down $3.97 at $44.01 a barrel by 21:30 pm IST. The losses wiped out gains made on Thursday, when prices rallied more than $4 to a session high of $49.12 a barrel before dropping back in late trading. Oil sank to $40.50 last Friday, its lowest in 4 years. London Brent crude was down $3.51 at $43.88 a barrel. US shares slid at the open, pressured by the uncertainty over the survival of the country’s automakers. The plight of the big US auto firms, including General Motors and Chrysler, illustrates the severity of the global economic downturn that has hit demand for oil. “The collapse in world oil demand in the fourth quarter of 2008 as the global credit crunch intensified, now threatens to push oil prices below $40 a barrel in the near term,” Goldman Sachs said in a research note. “The impact of the global economic recession has swung the oil market from pricing demand destruction in 2008 to pricing supply destruction in 2009,” it said. The US bank, which earlier this year had predicted $200 per barrel oil, virtually halved its 2009 price forecast for US crude to $45 and said the price could fall to $30 in the short term. Goldman analyst Arjun Murti, who predicted a super-spike in oil to $100 in 2005, said prices would hit a trough in the first quarter. The bank said a cut of an extra 2 million barrels per day was needed from Opec, which meets next on December 17 in Algeria. French bank BNP Paribas cut its 2009 price forecast to $53 a barrel from $75 previously. Crude has shed two-thirds of its value over the last five months, down about $100 from a record of $147.27 in July. It rebounded more than 10% on Thursday in anticipation of a big supply cut from the Organisation of the Petroleum Exporting Countries. Opec’s president Chakib Khelil has called for more ‘severe’ supply cuts at next week’s meeting. Russian President Dmitry Medvedev also weighed in, saying the country was ready to work with Opec on possible oil output cuts. Japan’s Nippon Oil said it expected Opec to agree to cut 1.5-2 million bpd next week. “Chances for a 2.5 million bpd cut are possible, but that would put increased criticism on Opec amidst the economic slowdown, so I think the likely cuts are up to 2 million bpd,” Kazuyoshi Takayama, Nippon Oil’s general manager, told reporters in Tokyo.

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