THERE is one source of comfort amid the crisis for the man in the street - falling oil prices.

Black gold has plunged more than 40 per cent to around US$79 (S$117) a barrel since hitting a peak of about US$145 in July, with more falls on the way, say analysts. This is the first time in a year that oil has fallen below US$80 a barrel.

Oil industry consultant Ong Eng Tong said: 'The financial crisis has hit the United States hardest, and they're the biggest petrol consumers. If this carries on, oil prices will continue to fall and could reach US$60 by the end of the year.'

The falling price will filter down to consumers most obviously in the form of cheaper petrol, but also in other less direct ways such as reducing transport costs and therefore food prices.

Earlier this week, for example, petrol companies cut pump prices for the eighth time since July.

Courier firm Network Express has seen its petrol bills fall by about $2,000 a month. Managing director V.S. Kumar said: 'It's a slight compensation for the economic crisis that's coming.'

Cabby Arthur Koh recalled the days of higher oil prices when he would drive for over 10 hours a day without covering costs. He said: 'Now that the diesel price has gone down, my income has gone up by about 10 per cent.'

Industry experts said a fall in crude oil prices usually filters through to petrol prices in two to three weeks, and to the electricity market in three months.

Fears of a looming global recession, falling demand in the US and rising production have driven oil prices down.

Demand in the US has averaged about 18.7 million barrels a day over the past four weeks - the lowest since June 1999.

Yesterday, the International Energy Agency cut its oil demand growth forecast for this year to its lowest rate in percentage terms since 1993, citing economic weakness and 'a spiralling liquidity crisis'.

Analysts believe the Organisation of Petroleum Exporting Countries (Opec) will cut production to defend oil values if prices dip below US$80. Opec members have asked for an emergency meeting in Vienna next month to deal with the price plunge.

Qatari Oil Minister Abdullah al-Attiyah said Opec will discuss 'cutting production' at the meeting if the group sees it as necessary to balance demand and supply.

The prospect of global recession is also dampening oil as an investment, and analysts are becoming less bullish in their forecasts.

BNP Paribas noted that 'the oil market is still searching for a bottom' as the financial turmoil spreads to Europe.

The French bank has cut its forecast oil prices next year by 18 per cent to US$104.40 due to the poor economic outlook. It also trimmed its 2008 forecast by 5.5 per cent to US$95.20 and its 2010 estimate by 11 per cent to US$105.60.

Other commodity watchers said crude prices could go to US$50 or US$150, depending on whether the world economy slips into recession.

'Should we enter a synchronous global recession, an unlikely event in our view, we still (believe) that oil could fall to US$50 a barrel next year,' said Merrill Lynch's commodity strategists.

But if some form of global financial rescue plan helps major economies avoid long-term stagnation, crude could head back up to US$150, they add.

alfoo@sph.com.sg