Oil Bounces Back After 3.5 Year Low

After a a three-and-a-half year low, oil prices bounced back as Asian markets rallied.

Brent crude increased to $49.11 a barrel while US light sweet crude was $50.18. On Thursday, prices hit lows of $48.90 and $49.62 respectively.

This is the first time prices have fallen below $50 since May 2005. Fears are growing a recession will hurt demand for fuel.

This week, the oil price fell 12%, some $100 less than its July record of $147.

Asian shares were buoyed by rumours that China could cut interest rates on Friday. Earlier, stock markets had touched a five-year low, taking their lead from weaker US stocks overnight.

US stocks had slumped to a decade-long low as uncertainty about the future of America's carmakers prevailed.

The decline in the price of oil has led to speculation that oil cartel Opec could reduce the supply of oil at an informal meeting in Cairo next week.

Members of Opec are to meet on November 29, after opting to cut output by 1.5 million barrels per day in October.

Fears are growing that a global recession could dampen demand for oil. On Wednesday, the Federal Reserve said it expected the US economy to shrink in the first half of next year, adding to fears over lower demand for fuel.

Figures from the Energy Information Administration released on Wednesday showed US stocks of crude oil increased by 1.6 million barrels last week - twice as much as expected.

Author: Jo Amey