20 Nov 2008

Price of oil falls to 22-month low

10:47 am on 20 November 2008

Oil prices dropped to 22-month lows on Wednesday as inventories rose in the United States and demand weakened due to the global economic slowdown.

US crude settled down 77 cents at $US53.62 per barrel, the lowest settle since 22 January, 2007. Earlier, prices rose slightly on forecasts for colder weather in the United States.

London Brent fell 12 cents to settle at $US51.72 per barrel - their lowest since 31 May, 2005.

Crude oil inventories rose 1.6 million barrels last week. However, the Energy Information Administration said US distillate stocks fell by 1.5 million barrels.

Total product demand fell by 7% against levels a year ago as consumption continues to fall.

Oil prices are down from a record $US147.27 per barrel on 11 July as demand in big consumer nations slows.

Members of the Organization of Petroleum Exporting Countries agreed in October to reduce supplies by 1.5 million barrels per day to help counter the price drop.

US mileage down

Meanwhile, the US Transportation Department said on Wednesday that motorists in the United States drove 10.7 billion miles less in September than they did a year earlier.

For the first nine months of this year, highway travel was down 79.2 billion miles, on the same period a year ago.