Healthy stocks send oil tumbling

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Mild weather and a rise in stockpiles of heating oil and petrol pushed oil prices beneath the $52-a-barrel mark for the first time since May 2005.

US light sweet crude finished down $2.14 to $51.88 per barrel on Thursday while London Brent crude ended the day down $1.99 lower at $51.70.

The warmer US weather had resulted in lower demand for heating oil and natural gas, analysts said.

Supply was also increased after Russia resumed the flow of oil to Europe.

It reopened the Druzhba pipeline after a three-day halt caused by a dispute with Belarus.

'Rebound potential'

An energy analyst at Fimat, Antoine Halff, said that production cuts by oil producers cartel Opec and violence in Nigeria could see prices rise again.

"The impact of weather should not be overstated. Heating demand is a comparatively small part of global consumption. There is potential for a rebound."

The milder-than-average weather in the northern US is expected to continue until mid-March, forecasters said.

Analysts said the markets were also still reacting to figures released on Wednesday showing that petrol stocks also rose, adding 3.8 million barrels last week.

Despite the fall - which has seen oil lose around a third of its value since July when it peaked at $78.40 a barrel - the price of oil remains far above its historic price.

A barrel of oil was sold for around $41 in 2004 and in 2003 that figure was $30.

The market will be closely watching to see what stance Opec decides to take in coming weeks, if prices continue their downward trend.

The group agreed in December to reduce output by some 500,000 barrels a day starting 1 February.