Oil falls sharply on big job cuts

Oil is far below the record of $147 a barrel reached in July

Oil prices have fallen to almost four-year lows after more bad economic data in the US, including unemployment benefit rises and big job cuts.

US light crude fell more than $3.12 a barrel to $43.67, its lowest level since January 2005.

London Brent fell by $3.16, to $42.24 a barrel, also a near four-year low.

Merrill Lynch analysts forecast that the price could fall as low as $30 a barrel should China fall into recession and Opec fail to cut production.

"With demand vanishing across all key oil-consuming regions, a strong rebound... is unlikely," they said.

Despite this worst case scenario, Merrill Lynch forecast an average oil price of $50 a barrel in 2009.

Oil prices are more than $100 below their $147 a barrel highs seen in July this year.

"The scale of the correction so far would indicate further pain on the downside," said Simon Denham of Capital spreads.

Figures released earlier on Thursday showed US unemployment benefit claims at a 26-year high.

Also on Thursday, telecommunications giant AT&T and other major US companies announced big job cuts.