Oil prices reached near 55 USD barrel on Thursday in Asia as more bad economic news from the United States heightened fears of a severe global downturn that will pulverize demand for crude.

Light, sweet crude for December delivery was down 1.08 USD to 55.08 USD per barrel, after falling to as low as 54. 55 USD, in electronic trading on the New York Mercantile Exchange in Singapore.

"As the world economy continues to weaken, we are going to see further great pressure on oil," mentioned Stephen Roach, chairman of Morgan Stanley Asia, in Singapore. "I think we will definitely challenge the 50 USD thresholds. We could challenge the 40USD threshold."

The department added next Wednesday it expects United States consumption of petroleum to next year drop more severely than any time since 1980. The department's Energy Information Administration added 2009 petroleum consumption is planned to sink by 250,000 barrels per day, or 1.4 percent, more than twice that plannedin its previous outlook.

Signs that United States consumer spending has plummeted also fueled pessimism. Department store retailer Macy's Inc. added sales decreased more than 8 percent in the third quarter and consumer electronics retailer Best Buy Co. slashed its fiscal 2010 guidance on fears that consumer spending will erode.

Morgan Stanley reported it is forecasted to cut 10 percent of staff at its institutional securities group the bank largest business that covers everything from investment banking to stock trading.

"It's not just gloom and doom sentiment, it is definitely real," noted Viktor Shum, an energy analyst at consultancy Purvin and Gertz in Singapore. "Companies are showing poor earnings and are announcing major job cuts."