LONDON- OIL fell to a new 17-month low below US$62 (S$93.81) a barrel on Monday, driven down by investor pessimism about the deteriorating global economic climate and its likely impact on demand for fuel.

US light crude for December delivery was down US$2.35 at US$61.80 a barrel by 8.03pm, after touching a 17-month low of US$61.30 a barrel.

London Brent crude was down $2.20 to $59.85.

'With what's going on in the equity markets, you can just see the risk aversion and it?s taking oil down with it,' said Mr Mike Wittner, analyst at Societe Generale.

Gloom about the world economy has overshadowed Opec's deal on Friday to chop output by 1.5 million barrels per day to try to defend prices.

'What OPEC did is constructive, but right now that is beside the point,' said Mr Wittner.

Some traders have said this reduction will not be enough to arrest the price slide.

Oil traders will now watch for signs that the Organisation of the Petroleum Exporting Countries is implementing its cuts.

Asian oil refiners said on Monday they had yet to receive notice of any curbs on their Gulf crude oil shipments, but most were bracing for a likely 5 per cent cut.

Iran's Opec Governor Mohammad Ali Khatibi has said the group will cut production further if the cut agreed in Vienna on Friday does not stabilise the market.

Oil prices have more than halved since they hit a record high above US$147 a barrel in July.

Demand is falling in the United States, the world's top energy consumer, and in other industrial countries as the credit crisis infects the wider economy and begins to spread to emerging markets.

In China, for example, apparent oil demand rose by just over 2 per cent in September, the slowest growth in 10 months.

Investors around the world are trying to find shelter, contributing to heavy losses on Asian and European stock markets, as well as other commodities such as gold and copper.

The volume of open contracts in energy, metals, grains and soft commodities on major U.S. commodity futures markets fell to its lowest since May 2006 in the week to Oct 21, as the risk of recession has prompted some investors to pull out. -- THOMSON REUTERS