MercoPress. South Atlantic News Agency

Oil price at a 16-month low as energy demand contracts

Oil prices tumbled on Wednesday to a 16-month low amid more evidence that the economic downturn was drying up energy demand. Light, sweet crude on the New York Mercantile Exchange - the benchmark price - settled at 66.75 US dollars, around five dollars lower than the day's high.

It is the lowest close since June 13 last year, and less than half the 147 dollar high seen in July. The fall came as the US Energy Information Administration said the country's oil stocks jumped by 3.2 million barrels last week, above the 2.9 million barrel increase expected by analysts. Gasoline inventories also rose by 2.7 million barrels last week, with both movements being seen as further signs that the slowing economy was dragging on oil demand. Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said: "The main theme here that's driving this market into new low ground is demand deterioration". In the UK the price of petrol dropped as low as 97.9p a litre this week as Britain's leading fuel retailers made a further round of reductions. Morrisons was first to make cuts, knocking two pence off the price of unleaded petrol and diesel per litre to 97.9p and 109.9p respectively. Supermarkets Asda and Tesco along with energy giants Total, BP and Shell followed suit with similar cuts. The Petrol Retailers Association (PRA) said it expected further cuts over the coming months. The Organization of Petroleum Exporting Countries is scheduled to hold an extraordinary meeting of the OPEC conference, in Vienna, next Friday October 24th. Analysts fear that the most radical OPEC members will demand a cut in crude production to stop the slide in prices.