Page last updated at 20:06 GMT, Thursday, 12 February 2009

Economy woes push oil below $34

Oil worker in Bahrain
US crude oil supplies have risen for seven consecutive weeks.

Oil prices have fallen by almost $2 a barrel to below $34 amid growing doubts that a US stimulus package will reinvigorate the US economy.

Claims for new unemployment benefit remaining close to record highs added to fears of the depth of recession.

Even an unexpected rise in retail sales was dismissed as a blip - attributed mainly to higher petrol prices.

US light, sweet crude tumbled $1.96, more than 5%, to settle at $33.98 but London Brent added 19 cents to $44.47.

Unemployment indicator

Earlier this week the Energy Information Administration reported a seventh consecutive weekly increase in nationwide crude oil stocks as the economic crisis crushed business and consumer demand for fuel.

The slowdown has left the price at more than $110 below the record price of close to $150 a barrel seen last July.

And rising US unemployment has led to further fears of weakening demand for oil among US consumers.

The US unemployment rate rose to 7.6% in January, up from 7.2% in December, according to official figures - the highest level since 1992.

The rapid rise in unemployment suggests the US recession is deepening.

Members of both houses of Congress have agreed a stimulus package, now worth $789bn (549bn), including tax cuts and spending aimed at rescuing the US economy.

But analysts have questioned how much the oil price will benefit from it.

"Just like the stock market, there's a feeling of the malaise because of a lack of definition," said Ritterbusch & Associates president Jim Ritterbusch.

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