WORLD oil prices continued to plummet yesterday ending fears of a global energy supply crunch.

But the sudden fall, with oil trading down to $US43.20, was not reflected on Asian markets on which Australia’s retail fuel prices are based.

Light crude sold on the Singapore exchange still traded above $US50 a barrel late yesterday.

“Prices will remain high because of geo-political problems and because oversupply has come down to between one million and 1.5 million barrels (a day),” said OPEC president Purnomo Yusgiantoro, Indonesia’s energy minister.

Crude oil futures slumped $US2.24 to $US43.25 a barrel on the New York market overnight yesterday, the lowest since since September 10.

The new price contrasts markedly with October prices where crude for delivery in January peaked at more than $US55 a barrel.

But the price of oil yesterday slipped in US trading to $12 below the late October peak.

Petroleum prices have been high all year due to strong demand, tight supply and fears of output disruptions in Iraq, Nigeria and Russia.

The US Department of Energy forced the sell-off of oil futures yesterday after dismissing fears of any winter heating oil or distillate shortage.

OPEC ministers will meet in Cairo next Friday to decide whether to rein in production.

In London the decline in the oil sector reportedly took about 18 points off the FTSE 100.

Market watchers were not convinced the oil price fall would give lasting support to shares.

“I’m not optimistic the oil price is going to $US30-35,” the head of equities at Brown Shipley, John Smith said.

“I get the feeling we’re setting up again for another rally towards the end of the year,” Mr Smith added.

Meanwhile BHP Billiton forecast yesterday that 2005 production would come in at between 125 to 130 million barrels.

Australia’s largest oil and gas company said three of its new oil and gas projects are on schedule to start producing this month, helping it increase production that slipped in the last quarter.

The Mad Dog project in the Gulf of Mexico, the Angostura field off Trinidad and the Minerva project off Australia would start up in December, the company said.

BHP is spending more than $2.2 billion on new oil and gas fields to reverse a production decline from older assets, with four projects starting this quarter.

Oil production fell 20 per cent in the three months ended September 30.

BHP has spent $870 million exploring for resources in the past three fiscal years, increasing its share of oil-equivalent resources by 550 million barrels.

It expects to drill three exploration wells and three appraisal wells in the Gulf of Mexico over the next 12 months, and is targeting more drilling in Trinidad and Tobago.

The company, also the world’s largest miner, posted an 18 per cent increase in pretax earnings from its petroleum and gas products unit in the year ended June 30, helped by higher oil prices.

The petroleum business unit was the biggest contributor to profit, accounting for a quarter of earnings.

BHP Billiton shares closed 23 down yesterday at $15.28.