Oil prices fall by record amounts

17 July 2008
Oil prices experienced their biggest one-day fall in 17 years on 15 July as speculators and traders reacted to warnings by the Federal Reserve that the US economy was weakening.

August crude futures dropped by almost $6.50 in a single-day’s trading to $134.5 a barrel. They recovered slightly, but then fell again the following day by more than $3 after the US’ Energy Information Administration (EIA) revealed that crude stocks had risen while demand had fallen.

According to EIA data, crude stocks increased by 3 million barrels to reach close to 297 million barrels. The market had been expecting a fall in reserves of more than 2 million barrels.

Falling demand for fuel also had an impact, as data showed that demand averaged 20 million barrels over the past month, a fall of 2 per cent on the equivalent period last year.

Oil prices have fallen more than $10 since they hit an all-time high of $147.3 a barrel on 11 July. However, anaylsts say it is too early to tell whether the recent fall marks a general correction in the crude price.

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