Page last updated at 20:45 GMT, Wednesday, 12 November 2008

Oil price slides to 20-month low

Oil pump
Investors are worried about slowing demand for crude oil

Oil prices have fallen to their lowest levels since January 2007, amid fears over lower energy demand and worsening economic prospects.

US light sweet crude fell $3.50 to $56.16 a barrel on Wednesday. Brent crude dropped $3.34 to $52.37 a barrel.

Global oil prices have now fallen about 60% since peaking at an all-time high of $147.27 a barrel back in July.

Investors had hoped for solid growth in oil demand from China, but it has been weakening there, as well as in the US.

"We have a pretty good idea that global growth is going to be pretty awful next year and probably not much better in 2010," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.

Most analysts predict that the US Energy Department will report on Thursday that US oil inventories have risen for the seventh week in a row, highlighting falling demand.

Possible cuts

Analysts also expect the International Energy Agency (IEA) to cut its global oil demand forecast in its report to be published on Thursday.

"With definitive slowing in China, the market is even more sensitive to negative economic news out of the US and Europe," Mr Pervan added.

Opec president Chakib Khelil said on Wednesday that the international oil cartel would "have to take a further decision on a cut in supply" if oil prices continue their fall.

At the same time, the International Energy Agency (IEA) says the era of cheap oil is over and prices could soon be back up to $100 a barrel.

The IEA, in its World Energy Outlook for 2008, says prices could soar to as high as $200 a barrel by 2030.

Print Sponsor

Energy body warns on oil prices
12 Nov 08 |  Science & Environment
Oil up on China investment plan
10 Nov 08 |  Business
Oil prices up on export cut talks
04 Nov 08 |  Business
Economic worries hit oil again
03 Nov 08 |  Business
US economy officially shrinking
30 Oct 08 |  Business
Oil falls despite production cuts
24 Oct 08 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2018 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific