23 Oct 2008

Price of oil drops 7%

8:20 am on 23 October 2008

Oil dropped in price by 7% on Wednesday after a big fall in demand in the United States over the past four weeks.

The US dollar also hit a two-year high against a basket of currencies.

At one point, the price fell to its lowest level since 14 June, 2007.

US crude fell $US5.08 to $US67.10 by 14.17pm EST (1756 GMT) on Wednesday, after earlier touching $US66.20.

London Brent crude traded down $US4.90 to $US64.82.

Oil is now down more than 50% since reaching a record $US147.27 on 11 July as the financial crisis cuts demand.

US demand over the four weeks ending 17 October fell 8.5% from a year ago, while inventory swelled.

The Energy Information Administration said US crude oil inventories rose 3.2 million barrels. Distillate inventories rose by 2.2 million barrels while gasoline inventories rose by 2.7 million barrels.

Meanwhile, OPEC is holding an emergency meeting on Friday in Vienna: the cartel is under pressure to reduce output.

OPEC President Chakib Khelil said oil stocks are high and some members are finding it hard to sell their oil.