Oil price drops below $66 on low demand forecasts

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Crude was down $1.66 to $65.85 a barrel in New York, having traded above $70 as recently as last week.

In London, the price was down $1.75 a barrel to $69.69.

"We've got overwhelmingly weak fundamentals in oil," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

"The market has really been due for a correction. The worst of the recession may be over, but for most economies, especially the US, the recovery may still be quite slow."

Oil has rallied strongly since its low of $35 a barrel in the winter, mirroring rises in global stock markets. However, like share prices, oil is still well below its peak of $147 a barrel of last summer.

Crude fell 4.8% last week, including a $3 drop on Friday — snapping a four-week streak of gains that were largely fuelled by optimism that the global economy had turned a corner, and recovery later this year would boost energy demand.

But hopes of a recovery faded after a report suggested consumers remain pessimistic about the immediate future. "This is likely to be a period of uncertain direction in prices given that activity has stopped declining, but is yet to exhibit any meaningful indications of growth," said David Greely, a commodity analyst at Goldman Sachs.