Recession fears hit oil prices

7 February 2008

Crude oil prices continued to slide on Wednesday as further evidence that the US is heading for a recession emerged.

A succession of gloomy reports about the health of the US economy have seen crude oil prices - which are the major factor in determining the cost of home heating oil - lose more than ten per cent since hitting record highs in early January.

The latest piece of bad news was the Energy Information Administration's update, which revealed the crude oil inventory in the US climbed by seven million barrels last week, while demand for petrol, diesel and heating oil fell.

Following the report's publication the price of US crude dropped by $1.27 to settle at $87.14 (€59.61) a barrel and Brent crude closed down $1.04 at $87.78.

Heating oil futures also fell, losing 2.77 cents to close at $2.4188 a gallon.

That figure suggests there will be more good news for home heating oil users in the coming weeks, after the EIA's report revealed the average retail price of the fuel in the US fell by one cent to $3.306 per gallon last week.