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Oil hits four-year low

Global growth concerns, weak demand help extend the rout

Brent crude hit a new four-year low on Wednesday before recovering to just under $85 a barrel, as faltering global growth curbed demand for fuel at a time of heavy oversupply.

Oil saw its biggest daily fall in more than three years on Tuesday after the West’s energy watchdog slashed its forecasts for world oil demand for this year and 2015.

Brent for November delivery touched a fresh post-2010 low of $83.37, down $1.67, before recovering to around $84.80 by 1330GMT. Brent has now fallen more than 25 per cent from the year’s mid-June peak.

US crude fell 24 cents a barrel to $80.61 after hitting a new 27-month low of $80.01 on Wednesday.

On Tuesday, the contract posted its largest fall in a single session in nearly two years.

Traders said prices had rebounded slightly after US crude held above $80 a barrel, a symbolically important level in a market that has crashed through most lines of major support.

But prices remain under pressure as core members of the Organisation of the Petroleum Exporting Countries (Opec) appear to be focused on fighting for market share rather than on cutting production to shore up prices.

Weak European markets and slowing Chinese inflation added to concerns about global growth, which have helped extend the rout.

“The global environment is bearish,” said market analyst Olivier Jakob of Petromatrix.

“There’s broad acceptance by the market that Saudi Arabia is willing to let prices go lower. With the velocity of the drop, definitely you’ve got people liquidating positions.”