The reduced demand that has accompanied the economic downturn in the US had been aggravated by unseasonably warm weather there and in areas of Europe. As a result, US refiners have squeezed plant-operating rates to an average 89.4 per cent capacity and built up stocks. Gasoline stocks rose by 4.22 million barrels to 211.22 million in the week to 11 January, against 197.89 million for the same time last year, the American Petroleum Institute said in a report published on 16 January.

'The lower price is an indication that the reality of the situation has come to the forefront,' says Ken Miller, senior energy analyst at refining consultant Purvin & Gertz. 'There was an initial positive reaction to OPEC's agreement with the non-OPEC producers, but in light of the state of the economy and in the absence of any statistics showing compliance, it's unsurprising that the prices have slipped. What's important is that they're only dipping, not crashing.'

Analysts expect the impact of OPEC's 28 December production cut to come into effect at the start of February. The reduction in exports from Iraq following the UN's imposition of retroactive pricing has also taken some crude out of the market.