Oil prices fell on Wednesday to below $59 a barrel as expectations of weaker energy demand more than offset news of reductions in supply.

The move extended a fall of 5 per cent on Tuesday when U.S. light crude oil futures closed below $60 for the first time since March 2007.

News that OPEC may cut supplies by an additional 1 million barrels per day (bpd) when it meets in Algeria next month did little to prevent the downward spiral that has knocked 60 per cent off oil's value from a record high of over $147 in mid-July.

US crude for December delivery was trading $1.10 lower at $58.21 by 0900 GMT. In the previous session, the market settled down $3.08 at $59.33 a barrel, its lowest settlement in 20 months.

London Brent crude shed $1.01 to $54.70 a barrel. "It's bearish news all around. I expect the IEA to further revise down the energy demand forecasts," said Tobias Merath, head of commodities research at Credit Suisse.

"Even the new set of industrial production numbers due from China and Japan this week should be having a bearish undertone."

China's industrial production growth slowed to about 8 per cent in the year to October, the first time it has been in single digits since the end of 2001, an official familiar with the data said earlier this week.

The official data is due on Thursday. In a research note, Credit Suisse added the US Department of Energy would probably cut its one-year WTI price forecast when its publishes its Short Term Energy Outlook on Thursday.

The World Bank has slashed its 2009 forecast for developing countries and has offered new financing of more than $100 billion over the next three years to help cope with the financial crisis.