Crude oil prices down 1.6 per cent

27 January 2009

Crude oil prices dropped by more than 1.5 per cent on Monday as concerns over faltering demand again began to hit values.

The market had experienced a surge in prices last week, with values rising for four consecutive days on the back of Opec production cuts.

However, analysts are now beginning to question whether this reduction in supply will be sufficient to prevent the downward trend in oil prices.

Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA, told Bloomberg: "There's a tug-of-war between Opec cutting supply and whether the cuts are large enough against the ever-shrinking demand."

US crude oil futures for March delivery fell 74 cents to close at $45.73 (£32.29) a barrel, while London Brent settled at $46.96 after falling $1.41.

This comes after Reuters reported yesterday that Opec officials could implement further cuts in oil production if prices do not recover to $75 a barrel in March.

Crude oil prices have plummeted since reaching summer highs of more than $147, which is likely to come as welcome news to heating oil customers across the UK.

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