Oil prices plunge by four per cent

24 September 2009

Crude oil prices plunged by nearly four per cent as hopes of an upturn in world fuel demand suffered a major blow on Wednesday.

A report by the US Energy Information showed that stockpiles of the fuel grew by almost three million barrels in the week ending September 18th.

The increase came despite analyst expectations of a 1.5-million barrel draw in inventories, sparking fresh concerns about demand in the world's top energy consuming country.

US crude for November delivery fell by $2.79 (£1.72) to settle at $68.97 a barrel, while London Brent crude slid by $2.54 to close at $67.99.

Phil Flynn, analyst at PFG Best Research, told Reuters: "The report reflects the real state of the economy in which demand for refined products is very weak and so supplies are high."

His comments may come as welcome news for home heating oil customers, as prices are unlikely to rise much further unless consumption begins to pick up.

Indeed, the market fell further in early trading on Thursday as US crude dropped 63 cents to $68.34 a barrel, while London Brent crude dipped by 55 cents to reach $67.44.

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