Economic fears force oil down

2 October 2007

The price of crude oil continued to fall on Monday as analysts worry about the state of the US economy.

Problems in the credit market, coupled with worries about the level of employment, have led to fears that a slowdown in the US economy could result in a fall in demand for oil-based products, persuading traders to cash in on the current high prices.

As a result, the price of US crude for November delivery fell by $1.42 to $80.20 (£39.30) a barrel, while London Brent crude dropped $1.53 to $77.64.

Despite the loss of value, the price of crude oil remains around $20 a barrel more expensive than at the start of the year and analysts are not certain whether or not this is the start of a downward trend or merely a blip.

Commonwealth Bank of Australia's David Moore told Thomson Financial: "You cannot rule out the possibility it will go higher. On the other hand, oil prices are very high by historical standards."

An indicator to the next price movement will arrive on Wednesday when the US Energy Information Administration publishes its weekly report detailing the country's stocks of crude, petrol and heating oil.