After reaching nearly 150 dollars per barrel earlier in the month, the price of oil fell back to $125. Consumers are thankfully starting to notice a drop in price per litre at their local petrol station. (Report: M. Henbest)
Oil has fallen by more than $23 a barrel from its record high of $147.27 on July 11, marking the biggest fall in dollar terms since futures began trading in
London Brent crude ticked down 8 cents to $125.21, after falling to a seven-week low of $124.10.
One potentially bullish factor was the threat from a militant group to sabotage oil facilities in exporter
"Warnings like this normally would spook the markets into pushing higher," said MF Global in a research note.
"We can only suggest that the market, finally weighed down by the spectre of decreasing energy demand, may not be as responsive to geopolitical headlines as it once was."
The main militant group in
Part of the reason for the record run-up in oil prices this year has been weakness of the U.S. dollar, which encouraged some investors to buy oil and other dollar-denominated commodities as a hedge against inflation and falls in other asset classes.
Analysts said the falls in oil since the middle of this month and in other commodity markets had coincided with some traders unwinding short-dollar/long-oil positions, which helped to lift the U.S. currency to a one-month high against the yen.
Even after the recent price fall, the oil price has still rallied by almost 30 percent in 2008 and is up from just $20 in 2002 on demand from growing economies like
"Global demand is heading for an increase and there is no fear that demand will weaken over the coming five years," Mousa Marafie, a member of the Supreme Petroleum Council in OPEC nation
"The current decline in prices is in the end a temporary decline," he said.
Date created : 2008-07-24