28 Apr 2009

Price of oil falls as flu threatens air travel

7:42 am on 28 April 2009

Oil prices are down by 2.7% on worries a flu outbreak in Mexico could become a pandemic and hurt air travel and the global economy.

US oil futures dropped $US1.41 on Monday to settle at $US50.14 per barrel. London Brent crude fell $US1.39 to $US50.28 per barrel.

The virus has spread to the United States and Canada and also reached Europe.

The World Bank estimated in 2008 that a flu pandemic could cost $US3 trillion and result in a drop of almost 5% in global gross domestic product.

Oil is now about $US100 per barrel below a record price of $US147.27 per barrel reached on 11 July.

The global recession and shrinking oil demand pushed prices toward $US30 per barrel earlier this year.

Since September last year, members of the Organization of the Petroleum Exporting Countries have agreed to cut supply by 4.2 million barrels per day to try to prop up prices.

OPEC meets next on 28 May.