Crude oil prices continue to fall

18 February 2009

The oil market took another significant downturn on Tuesday as prices dropped by up to seven per cent.

US crude oil for March delivery fell $2.58 to settle at $34.93 (£25) a barrel, while London Brent crude for April sank to $41.03 after a fall of $2.25.

The drops came on the back of continued economic uncertainty, with concerns over global demand for oil prompting prices to plummet.

This could be good news for home heating oil customers, as cheaper crude oil prices could result in lower fuel costs.

Furthermore, most analysts agree that economic deterioration is likely to continue causing energy demand to shrink - with Opec production cuts not enough to halt the slide in prices.

Bart Melek, an analyst at BMO Capital Markets, told the Associated Press: "Ultimately the market is realising that even if Opec cuts supply, it will take quite a bit of time to unwind inventories and balance the market."

The recent falls come after prices climbed by more than ten per cent on Friday as hopes of a recovery were raised by President Obama's economic stimulus package for the US.

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