Oil price fall continues

24 July 2008

Oil prices have continued to fall, dropping below the $125 (€79.67) per barrel mark.

A report by the US Energy Department found that demand had declined in recent weeks, contributing to a drop in the cost of a barrel of light, sweet crude by nearly $4 yesterday.

The closing price of $124.44 represented the lowest such figure since early June.

Commodity strategist David Moore was quoted by Bloomberg as observing that previous high prices have created a situation where demand is adjusting, "ultimately causing prices to be at a lower level".

"There seems to be an intangible factor here where sentiment has swung quite sharply in the past couple weeks," he added.

Fears that Hurricane Dolly would disrupt production in the Gulf of Mexico led to speculation over prices, but these have now subsided.

Earlier this month the head of the International Energy Agency told German newspaper Handelsblatt that although the cost of oil would ease over the next two years, the situation would "remain tight" until at least 2013.

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