Oil prices continue to tumble
Updated on 20 November 2008
Oil prices fell to another near two-year low as traders predicted the economic downturn would hit demand.
Light, sweet crude on the New York Mercantile Exchange - the benchmark price - was down 92 cents to 52.70 US dollars a barrel in Asian trading. London Brent crude was more than 1% lower at 51 US dollars a barrel.
Analysts, spurred by plummeting stock markets, said New York oil was expected to hit the 50 US dollar mark "sooner rather than later".
Toby Hassall, an analyst at Commodity Warrants Australia, said: "People are saying this slowdown could be the worst since the Great Depression." He added: "The stock markets are representing investor pessimism regarding the economic outlook and what we have in store over the next year."
Concerns that US Congress may decide not to approve a 25 billion US dollar (£16.8 billion) rescue package for ailing car makers General Motors, Ford and Chrysler helped drag the Dow Jones industrial average down 5.1% on Wednesday to its lowest level since March 2003.
On Wednesday, several UK retailers announced they were cutting the price of petrol at the pump as retailers came under pressure to reflect the falls in the price of crude, which has plummeted from a 147 dollar high in July.
Asda's 10th consecutive cut since July brought petrol prices to their lowest level since April last year, at 90.9p per litre. Sainsbury's, Tesco, Total and BP all followed suit. The news came as the AA revealed the price of petrol had fallen by a record amount over the past month.
Average UK prices dropped from 106.4p a litre in mid-October to 94.86p a litre in mid-November. Compared with mid-July, when petrol prices peaked at 119.7p a litre, a tank of petrol now costs £12.42 less. It is believed that a production cut by the oil countries of 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 Mr Hassall said: "It's going to take a pretty big supply-side response from Opec at their next meeting to provide some support. I think we are going to see oil test 50 dollars sooner rather than later."
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