West Texas Intermediate (WTI) oil for December delivery on the New York Mercantile Exchange traded at $70.60 on 30 October after trading as low as $61.30 a barrel on 28 October, a level last seen in May 2007.

The price of WTI is still 60 per cent down since hitting an all-time record of $147.27 on 11 July.

China cut its interest rate to 6.66 per cent from 6.93 per cent while the US Federal Reserve slashed interest rate to a four-year low of just 1 per cent.

The market largely shrugged off the decision by Opec to cut production by 1.5 million barrels a day (b/d) on 24 October, although investment bank Barclays Capital says the Saudi cut, in particular, is significant.

“Saudi Arabia has, in effect, signalled an intention to head back towards 8.5 million b/d and to unwind all of the past 20 months of steady output increases,” says the bank.

Analysts Citi Futures Perspective says although the headline cut was 1.5 million b/d, it will effectively be a 2 million b/d cut, considering Opec production in September was actually an estimated 500,000 b/d above the old quotas.