Oil Price Below $100 As Demand Slows

The price of Brent crude, the North Sea benchmark oil, for October delivery dropped $1.41 a barrel to $98.93, despite oil cartel Opec’s decision to cut supply.Signs of a slowing economy in the United States expected to hit demand for oil brought an end to earlier rises with light, sweet crude also declining to $102.15 a barrel on the New York Mercantile Exchange.The International Energy Agency lowered its global oil demand forecast for both this year and 2009 to reflect slower economic growth.Oil had moved higher after the Organisation of Petroleum Exporting Countries, which concluded a meeting in Vienna early yesterday, said it would produce 28.8m barrels a day, consistent with levels agreed in September last year.The outcome effectively meant member countries had agreed to cut back 520,000 barrels a day of excess production. Countries regularly produce oil above the organisation’s overall quota to maximise revenues.The deal was seen as a compromise to avoid new turmoil in crude oil markets while seeking to prevent prices from falling too far.The 13-nation organisation whose members include Saudi Arabia, Iran, Venezuela and Nigeria wants to avoid oil prices falling rapidly.Opec nations have around two-thirds of the world’s known oil reserves,.Opec said the oil market was “well supplied” and that had enabled inventories “to be built up to comfortable levels in terms of forward demand cover”.The New York price has dropped nearly 30 per cent from the $147 a barrel high in July.Prices on UK forecourts have not fallen as quickly, with petrol down from July’s peak by just under six per cent and diesel by just under seven per cent.

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