Oil continues to fall despite early gains

30/01/2009

Oil prices have continued to slide during trading this morning (January 30th) despite a small early rally.

Crude for March delivery sold on the New York Mercantile Exchange dropped a further 23 cents, taking the commodity to $41.21 (£28.83) a barrel by 10:26 GMT.

The price drops witnessed this week have also had an effect on wholesale heating oil prices, while DERV prices have also been coming down at the pumps recently as crude continues its decline.

Bloomberg analysts forecast that oil will drop 11 per cent this week as weak economic data continues to stifle demand.

Victor Shum, a senior principal at consultants Purvin & Gertz in Singapore, told the news agency: "It would be brave to say the US and global economy has reached a bottom and most forecasters are looking for more oil demand destruction in 2009."

Heating oil prices may well remain subdued until a change of sentiment affects the market and demand for crude increases.