A sharp fall in energy prices around the world signals worse to come for the slowing global economy as China's decade-long boom peters out, in addition to Europe's long struggle with recession, say analysts.

The price of oil, the world's most important fuel source, has dropped 20 per cent since the summer to below $92 per barrel, a level last seen in June 2012.

The price declines were largely the result of greater supply, citing the North American shale boom, the tapping of new offshore reserves worldwide and greater output of coal, energy analysts were quoted as saying by the Gulf Daily News, our sister publication.

But analysts have also begun pointing to a slowdown in demand. They cite China's ebbing thirst for oil and what could its first drop in demand for coal in over a decade as indicators of a sharper slowdown in the world's second-biggest economy.

'China's initial economic acceleration has faded. With the US acceleration reaching its limits, we have seen our Global Leading Indicator slip into slowdown,' Goldman Sachs said in a research note.

'Without re-acceleration outside the US, this may not change quickly,' the bank said.

Goldman said China could still get close to its economic growth target of 7.5 per cent for this year, but 'there is a good chance of more slowing early next year'.

That would have profound implications worldwide, since the economies of China and the US have been growing, while Europe and Japan continue to struggle in the wake of the financial crisis.

'Overall, the global economy is weaker than we had envisaged even six months ago,' International Monetary Fund (IMF) chief Christine Lagarde said in Washington.

'Only a modest pickup is foreseen for 2015 as the outlook for potential growth has been pared down.'

The IMF holds its annual meeting next week and will release its latest World Economic Outlook beforehand.

Further affecting demand for fossil fuels, households and industries in developed economies are becoming more efficient in using energy and are moving more to renewables and other alternative fuel sources.

Coal has almost halved in value since spring 2011 to levels at which most producers are losing money. Gas prices in Europe have fallen over 6 per cent this year despite the crisis between Russia, its main supplier, and Ukraine, a vital transit route for EU imports. – TradeArabia News Service