Oil price plunges as fuel stockpiles

THE price of oil tumbled more than 2pc this week – the largest weekly fall in eight months – amid a record buildup of supply.

Global oil stockpiles soared to a record of just below 3bn barrels, according to the International Energy Agency.

Brent Crude fell again yesterday – to $44.4 a barrel, the lowest since August and the price is down around 44pc this year.

The price of US Crude was also weaker as the American Petroleum Institute reported stockpiles had jumped for the seventh week in a row. It is well below last year’s peak of over $115 a barrel as a supply glut caused by growing production of US shale and the continued supply from the Middle East has been met with flat demand globally.

An estimated oversupply of between 0.7m and 2.5m barrels per day has resulted in prices dropping almost two thirds since June last year.

The IEA said a mild winter could cause the stockpile to increase in coming months.

Many of the barrels – tens of millions – are sitting on tankers at sea. However, despite the fears of continued falls in the price, experts at Capital Economics predicted strong growth in demand for oil over the next few years.

The Capital Economics report said: ‘OPEC expects demand to increase by about 1.5m barrels per day this year and a further 1.25m barrels per day in 2016.

‘However, in the long run, demand growth will slow even if prices remain low.’

It forecast that by the end of 2016 the price of Brent will be at $60 a barrel and its 2020 forecast is $70.