CRUDE oil fell below $50 a barrel to its lowest level for three and a half years yesterday amid fears over the impact of a global downturn on demand.
Brent crude for January delivery sank to $48.45 in London – the lowest since March 2005 – before clawing back some ground, after a fresh round of dire economic news.
Light, sweet crude on the New York Mercantile Exchange – the benchmark price – s
lipped to $49.75 for December delivery. That is about a third of the $147.27 peak reached in mid-July.
Sharp falls on global stock markets this week have reflected worsening fears over the economic outlook.
Toby Hassall, an analyst at Commodity Warrants Australia, said: "People are saying this slowdown could be the worst since the Great Depression.
"The stock markets are representing investor pessimism regarding the economic outlook and what we have in store over the next year."
It is believed that a production cut by the oil countries of cartel Opec may stop prices falling further.
The group is holding an informal meeting later this month ahead of its official December conference and Opec president Chakib Khelil has signalled that the organisation may announce production cuts at the formal summit.
But Hassall said: "It's going to take a pretty big supply-side response from Opec at their next meeting to provide some support."
Several UK retailers have announced price cuts at the pump this week as they come under pressure to reflect the falls in the price of crude. The AA revealed that the price of petrol had fallen by a record amount over the past month.
