Oil continues its slide below $60

Oil prices have fallen more than $18 a barrel since late July

World oil prices have fallen below $60 a barrel for the first time in more than six months as the dramatic slide of recent weeks continues.

In New York, a barrel of light crude dipped 61 cents to $59.94 a barrel, while London's main Brent crude contract dropped 84 cents to $59.57.

Prices are down sharply from the record high of more than $78 a barrel in July.

A key factor has been the receding possibility of oil-rich Iran facing sanctions related to its nuclear plans.

'Very split'

US light, sweet crude was last below $60 a barrel in March this year, while Brent crude has stood above $60 since February.

The market seems to be bearish with the Iran situation looking like it is reaching a compromise Tony Nunan, Mitsubishi Corporation Graph of oil price moves

Analysts said it was difficult to tell how far prices might fall in the current phase.

"The market is very split between those who feel this is a temporary correction... and those, like ourselves, who feel prices are going to be weak next year," said Eoin O'Callaghan of BNP Paribas.

Tony Nunan, energy risk manager at Mitsubishi Corporation, added that the oil market was "falling like crazy and people are bailing out of their positions".

"The market seems to be bearish with the Iran situation looking like it is reaching a compromise," he added.

The drop in crude prices may bring welcome relief to consumers after supermarket group Tesco said that it would cut petrol prices by 2 pence a litre from Monday.

Consumers have been hit by high petrol costs and rising energy prices, and analysts had voiced concerns about the long-term effect on inflation and spending.