Page last updated at 10:58 GMT, Monday, 26 January 2009

Oil falls despite Opec output cut

Oil worker in Bahrain
Opec agreed last month to cut output by 2.2 million barrels a day

Oil prices have fallen by more than $1 a barrel on continued forecasts of a deepening global economic downturn.

US light crude for March delivery fell $1.22 to $45.25 a barrel, before recovering slightly to $45.52. London Brent crude slipped $1.00 to $47.37.

Oil prices rose by 14% towards the end of last week on evidence that Opec oil producers were reducing output.

But analysts predict energy use will fall this year as recession hits most of the largest developed economies.

"The market is correcting from the sharp rally on Friday," said Christopher Bellew, broker at Bache Commodities in London.

"Essentially the market is range-bound with poor demand being balanced by Opec production cuts."

Oil's $2-a-barrel rally on Friday came as it appeared that Opec was keeping to its promise of a 2.2 million barrel a day production cut this month.

Prices have fallen as low as $35 a barrel recently. Oil prices peaked at above $147 a barrel in July last year.

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