Oil prices settle at one-year low

US light, sweet crude sank $2.50 to $56.26 a barrel, while Brent crude lost $3.07 cents to $58.54.

Oil producers cartel Opec is expected to further cut output - but a slowing of the US economy has weakened demand.

The predicted mild winter in the US - the world's top consumer - has also led traders to sell off oil.

Thursday's Energy Department report - showing that US's inventory of natural gas had grown again - also pushed prices lower.

Implications

Oil prices hit record highs of more than $78 in July - against the backdrop of the conflict in Lebanon.

Some analysts feel that there is enough geo-political instability in oil producing nations such as Iran and Nigeria for prices to rise again.

But director of commodity strategy at Societe General, Michael Guido, said that traders were being less reactive to the kinds of news - from kidnappings of oil workers to the implications of sanctions against Iran.

"Too much money has been lost on what-if scenarios he said".

The president of Opec, Edmund Daukoru, told the Reuters news agency that the oil group's members were generally in favour of a cut to output before the end of the year.

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