20 Dec 2008

Oil price falls over 6%

9:55 am on 20 December 2008

Oil fell in price by more than 6% on Friday, despite proposed production cuts by major oil exporters.

US light crude for January delivery, which expired on Friday, settled down $US2.35 at $US33.87 per barrel, the lowest since 10 February, 2004.

The February contract settled up 69 cents at $US42.36 per barrel. Latest cuts in OPEC production are expected to take hold in that month. London Brent crude gained 64 cents, settling at $44.00.

Oil prices are down by more than $US100 from their peak of $US147.27 on 11 July due to the global economic downturn.

Forecasters predict that global oil demand will contract for the first time since 1983.

Members of the Organization of the Petroleum Exporting Countries decided on Thursday to cut output by 2.2 million barrels per day.

It was the third cut in production by OPEC since September - amounting to more than 4 million bpd.