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Oil price falls on lower demand Oil prices rise as stocks decline
(1 day later)
The price of oil has fallen after government figures showed a sharp slowdown in US demand. Oil prices have climbed after weekly US government figures showed a drop in crude oil and petrol inventories.
Light sweet oil fell to $112.31 a barrel, its lowest in more than three months, before settling at $113.01. US light sweet crude settled $2.99 higher at $116 a barrel, while London Brent rose $2.32 at $113.47.
Energy Information Administration data showed US demand for oil in the first half of 2008 saw its sharpest drop in 26 years, compared to a year before. Energy Information Administration data showed that crude oil imports had been hit by tropical storm Edouard.
Oil prices have fallen from record highs of more than $147 in July, as the economy has slowed. Despite the rise, the price of crude oil is far off the record of $147 hit in July. Analysts say any increases are likely to be limited as demand falls.
The Energy Information Administration (IEA) said that US demand for oil fell 800,000 barrels per day for the first six months of this year, compared to the same period a year earlier. As the US economy slows, demand for oil has fallen and there are predictions that this trend will continue.
The IEA predicts that US oil demand next year will be at its lowest since 2003, at 20.08m barrels per day on "prospects of a weak economy and continuing high crude oil prices". Petrol stocks fell 6.4 million barrels to 202.8 million barrels in the week ending August 8 - marking a fall three time greater than expected, the EIA data showed.
The latest figures showed that while US demand dropped sharply, non-industrialised nations saw demand rise by 1.3m barrels per day for the first half of 2008. 'Weak economy'
Commenting on the data, Kyle Cooper, an analyst with IAF Advisors, said: "It takes a lot of bullish arguments away, but $113 is still not cheap." Prices sank on Tuesday after US figures showed a sharp slowdown in domestic demand, triggered by higher fuel costs.
Separately on Tuesday, a plan between Russia and Georgia to end fighting between the two nations eased concerns that supplies in the region could be disrupted. Data from the US Energy Department's Energy Information Administration showed demand for oil in the first half of 2008 saw its sharpest drop in 26 years, compared to a year before.
Though Georgia is not an oil producer, key crude and gas exports are transported through it. US demand for oil fell 800,000 barrels per day for the first six months of this year, compared to the same period a year earlier.
The EIA predicts that US oil demand next year will be at its lowest since 2003, at 20.08m barrels per day on "prospects of a weak economy and continuing high crude oil prices".
While US demand dropped sharply, non-industrialised nations saw demand rise by 1.3m barrels per day for the first half of 2008.