LONDON, Feb 17: The price of New York crude oil slid below $35 a barrel on Tuesday as falling demand boosted inventories in the United States, the world’s biggest energy consumer, traders said.

New York’s main futures contract, light sweet crude for delivery in March, sank $2.81 cents to $34.70 a barrel.

Brent North Sea crude for April delivery slid $1.84 to $41.44 a barrel.

“Demand concerns and high inventories have the upper hand again,” said Dresdner Kleinwort analyst Eugen Weinberg in a note to clients.

Traders also took their cue from tumbling global stock markets amid fears for the health of the banking and automobile sectors, and doubts about the effectiveness of a controversial US economic stimulus package.

Oil trading on the floor of the New York Mercantile Exchange (NYMEX) was shut on Monday owing to a public holiday in the United States, leaving investors able to trade only electronically.

The large crude inventory buildup in Cushing, Oklahoma, as well as the expiry of the March contract this Friday, helped pull the benchmark New York contract below $37, added Victor Shum of Purvin and Gertz energy consultants. Cushing is the delivery point for NYMEX crude.

“There is downward pressure on NYMEX crude on top of the (demand and supply) fundamentals which are quite gloomy for oil because of the weak economic outlook,” he said.

The price differential between New York crude and Brent oil hit a record of more than $11 last week, which analysts attributed to soaring energy stockpiles in the United States.

“Oil markets are likely to remain vulnerable to further losses with risk aversion on the rise and as bulls lose hope for a swift recovery in global economies following an array of negative economic data recently,” said Sucden Financial analyst Nimit Khamar.

Last Friday, Opec trimmed its forecasts for global oil demand, forecasting that it would shrink by 0.67 per cent in 2009 because of “economic depression” in industrialised countries.

Also last week, the International Energy Agency cut its forecast for global oil demand this year, but warned about a future supply crunch because of current low investment levels.

The energy watchdog for industrialised nations forecast that global oil demand would measure 84.7 million barrels per day (bpd) on average in 2009 -- 570,000 bpd less than its last forecast made in January.

At this level, demand would be 1.1 per cent or 1.0 million bpd less than in 2008, when demand also fell compared with the year earlier.—AFP