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London oil price slides below $72

RTÉ News

Wednesday, 15 October 2008 13:21

 The price of oil slumped below $72 today, its lowest level for over 13 months, as recession fears raised concerns about a prolonged drop in energy demand.

The global financial crisis will give a vicious twist to an economic slowdown and is hitting world demand for oil, although the effect on emerging economies is unclear, OPEC said today.

The Organisation of Petroleum Exporting Countries slashed its estimate of growth in demand this year and shaved its estimate for 2009, largely because of an ‘excessive’ easing of demand in the US, the single biggest energy market.

Prices also fell today after the news that a Nigerian court has ordered Anglo-Dutch energy giant Royal Dutch Shell to hand over land to locals, a key demand of armed rebels camped in Nigeria’s oil-producing region.

Brent North Sea crude for November delivery fell to $71.60 a barrel – the lowest level since August 2007 – before recovering to stand at $72.41. That was still down $2.12 compared to last night’s close.

New York’s main contract, light sweet crude for November, shed $1.98 to $76.65.

Brent crude has fallen by more than half from a record high $147.50 in July, when prices rocketed on fears of supply disruptions.

Analysts said that oil prices are sliding on concerns that the coordinated action by central banks over the last week will not be enough to rescue economies from falling into a global recession and hence weighing on oil demand.

Markets were, meanwhile, awaiting the latest weekly snapshot of US energy inventories due tomorrow for a lead on the state of demand for oil in the world’s biggest consumer of crude. The Department of Energy’s latest data on inventories has been delayed a day owing to a public holiday in the US on Monday.

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